Wednesday, July 27, 2011

Exposing False Dogma

One thing a political party should never, ever, do is to allow your most basic core principal to be demonstrated to be false. If you have been saying for generations that taxing the rich and the corporations is bad for the economy and cost American jobs. The worst thing you could possibly do is to give the other side the opportunity to show that it just isn’t true, never was true, and the American public just won’t buy that song and dance any more. For thirty years Republicans have been chanting the mantra that lower taxes and less regulation on corporations will create jobs and strengthen the economy. Just recently, Arizona Senator John Kyle ®, stated on Meet the Press that “The last thing we want to do in the middle of a recession is raise taxes.” Of course what he is really talking about is raising taxes on the corporations and the rich because the President and the Democrats aren‘t talking about raising taxes on the middle class and the poor whether there is a recession or not. So that irrelevant argument by Republicans is nothing more than a straw man to be set up and knocked down. That’s not even on the table and even Republicans don’t have the gall to say let’s increase taxes on the poor so we can give even bigger tax cuts to the rich. That would make it just way too obvious to working people what their real goals are.

In 2010 corporate profits grew by 81% for a total of nearly $10.8 trillion, almost as much as the national debt. The supposed justification for the lower tax rates and government subsidizes to companies that are making record profits is that they are going to create more jobs with all that profit. Still, unemployment is up because those corporations continue to cut jobs, outsource jobs and lavishly reward their CEOs instead of rewarding their workers for being more productive. There simply is no compelling evidence that lower tax rates on high income earners trickles down to the rest of us and makes us more competitive in the world market.

Before Ronald Reagan was President (1965 - 1981) the top tax rate was 70% for those making $215,400. Before that, from 1954 - 1963 it was 75% on $100,000, so according to present day Republican logic the economy and unemployment must have been really bad. While there is no direct correlation between tax rates, the state of the economy and unemployment due to other factors the figures generally show that when tax rates were high the economy was usually pretty good and unemployment was low.

In 1944 the top tax rate was 94% and unemployment was at its 1.5%; its lowest point in history, but that was at the end of World War II. Up until Ronald Reagan the national debt was very low compared to GDP and unemployment hit a post World War II low of 3.6% when Lyndon Johnson was President and created many government programs that created jobs and needed services. Under Democrats and Republicans the unemployment rate was fairly low. In 1982 the top tax rate was cut to 50% on $172,250 and in 1987 in went dramatically down to 38.5% on $90,000. In 1982 unemployment soared to 9.7% and the national debt as a percentage of GDP shot up to 11.3% and in his 2nd term it went up another 9.3%. The situation got even worse under George H. W. Bush when the debt went up 13% of GDP and the economy went into recession. Clinton reduced the rate to 9% and 0.7% in his 2nd term. George W. Bush increased that debt rate to 7.1% and 20.7% in his 2nd term. Taking over in an economic meltdown with nothing but obstruction to his attempts to bring the economy back President Obama has increased the deficit rate to 9% of GDP while inheriting two wars. Also when Clinton took office unemployment was 7.5% and it was 4% when he left. When George W. took over with a Republican Congress the present historically low rate of 35% of $373,651 was established and is the top rate today. That is a lot of statistics but so often the truth lies in the numbers and not in the rhetoric.
Republicans claim that ending the Bush tax cuts would hurt small businesses but in fact CNN reported in 2008 that only 1.4% of small businesses would pay more. Fully a third of the Bush tax cuts went to the top 1% while the bottom 20% gained only 0.4% as the deficit skyrocketed. The dividend and capital gains cuts saw 70% of that money going to the top 2%. The Congressional Budget Office (CBO) wrote that of eleven potential economic stimulus programs the extension of all the Bush tax cuts were the least effective of any plan. Perhaps a major factor in the lack of job creation due to low tax rates on the rich is that when they had to pay 70% or more they choose to invest the extra money in expanding the company instead of paying it in taxes to the government. Or, they my have given workers raises or benefits, but now that they can keep 2/3 or more of what they make they simply opt to be fabulously wealthy.

There are some things that can be demonstrated to be true by so much scientific evidence that it is hard to believe that any well informed, rational person could have serious doubts. Economic theories over time can be tested by data. However, these results are frequently open to interpretation; also known as spin. The Republicans have numerous foundations, such as the Heritage Foundation, established by wealthy benefactors whose main purpose is to convince the public that the evidence shows that by transferring their money to the rich and the corporations is somehow in their best interest.

We need to stop being so polite when Republicans tell lies. Every time they say, “We need to cut taxes not raise them.” or “Now is not a good time to raise taxes.” Or “We need a smaller government.” We need to call them on it and not just give them a pass on it because a lie told over and over will begin to sound like the truth if it isn’t challenged every single time. They can’t prove these statements because the evidence doesn’t support their claims and they heavily rely on the voter having a short selective memory.  Only by picking and choosing their data can they make the case that giving billions to corporations and the rich creates jobs.  That is not the scientific method its just propaganda.

We need to raise taxes on the rich so they start paying their fair share again. Not just because it’s fair but because government serves the needs of the people better that way. History has shown the economy works better when the top rate is at least 50%. President Obama is right about needing a fair and balanced approach on dealing with a deficit that is unsustainable. Now is a good time to eliminate the Bush tax breaks on the rich because the national debt is too high and we need to start paying it down.

Dave Silva

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