I'm editing out a lot of this article by Reich. I'm especially interested in his progressive ideas on paying for the fed. government.
Financing the Common Good
By Robert B. Reich
February 1, 2008 | Prospect.org
> ... A new Democratic president coming into office in 2009 will face a national debt much larger than it was in 1993. Despite the $5 trillion 10-year budget surplus that ended the Clinton years, the federal debt at the end of the Bush years will be almost $4 trillion larger than it was then. It will have grown about 70 percent during Bush's reign.
> ... the administration of George W. Bush has exploited the asymmetry in American politics. By trashing the institutions of government, the younger Bush personified his central thesis that government cannot be trusted to do anything well. He has shown that Republicans cannot lose at this game. There is no downside in treating government like a sewer. To the extent they have been careless or negligent with it, or crassly mendacious, illegally rewarding cronies and punishing opponents, splurging and plundering at every turn, they still come out on top. If, against all odds, a program or initiative somehow succeeds, they can show how wise they were all along. If programs or initiatives fail, as has been more likely, the failures only illustrate why citizens and taxpayers should not rely on government in the first place. Bush has thus enlarged upon the Reagan-era fiscal tactic of "starving the beast" of revenues into a more insidious strategy of starving the beast of public trust.
> ...Increase the staffing of regulatory agencies charged with protecting the public, and appoint regulators who believe in protecting citizens. See to it that corporate lawbreakers are prosecuted vigorously. There is no better means of demonstrating to the public why government is necessary and, not incidentally, that you are not in the pockets of the powerful. Crack down on unsafe products, sweatshops, consumer fraud, bribery, the looting of corporations by executives, illegal firings, sexual harassment, oil spills, predatory lending, insurance companies that fail to honor their policies, underfunded pension plans, corruption in the awarding of government contracts. Protect corporate whistleblowers. Publicly castigate CEOs who endanger or defraud the public.
> ...Where to get the additional money? Three sources: The peace dividend from ending the Iraq War, a more progressive tax, and modest deficit spending. Because many of America's deferred needs are felt so directly by a large majority of citizens -- health care, early education, child care, training for good jobs, better public transit, and so on -- you can gain support for additional revenue if you educate the public about what you're doing and why.
Start with the peace dividend. According to government figures, the wars in Iraq and Afghanistan have so far cost the United States more than half a trillion dollars. Another four years would cost significantly more, because this figure doesn't include the ever larger costs of recruitment or the cost of replacing the equipment that's been used in the war so far. If you ended the war, it's safe to say that the peace dividend would be more than $100 billion a year, even including the costs of attending to our wounded.
The only people who have the money necessary to reverse the nation's troubling trends are at the top. Recent data from the IRS show that the wealthiest 1 percent of Americans are earning more than 21 percent of all income -- a postwar record -- while the bottom 50 percent of Americans combined are earning just 12.8 percent of total income. (Right-wingers have attacked these data by arguing that the IRS improperly counts adjusted gross income, but however you try to bend the numbers the trend is unmistakable.)
Explain to the public that even as income and wealth have become more concentrated than at any time in the past 80 years, those at the top are now taxed at lower rates than rich Americans have been taxed since before the start of World War II. Taxpayers who bring home over $5 million annually now pay less than 22 percent of their incomes in federal tax, on average. Managers of hedge funds, private-equity partners, and many venture capitalists are paying no more than 15 percent -- since their earnings are, absurdly, treated as capital gains. This means that America's wealthiest, who have been receiving most of the economy's bounty, are paying a smaller percentage of their income in taxes than are middle-class Americans. Financiers who are raking in hundreds of millions -- last year, each of the 25 highest paid hedge-fund managers took in an average of $560 million -- are paying at a lower rate than many of America's working poor who barely clear $20,000 annually.
How to sell a higher marginal tax on the wealthy? Emphasize that there's no way the country can do what's needed unless more money is raised -- and yet, if the rich don't pay their fair share, the burden will fall on a middle class that's already financially strapped. By the same token, only a relatively few at the top would need to pay more. According to the Institute on Taxation and Economic Policy, if the marginal income tax rate on Americans whose yearly income exceeds $10 million were raised to 70 percent, and the rate for those who earn between $5 million and $10 million a year were raised to 50 percent, federal revenues in 2008 would increase by $105 billion. By my calculation, a tiny annual wealth tax of one-tenth of 1 percent on all net worth exceeding $5 million -- a tax that would affect only 50,000 households, or fewer than one-tenth of 1 percent of the nation's taxpayers -- would yield an additional $100 billion.
Point out that a progressive income tax has been a cornerstone of our fiscal system since 1913 -- and our current non-progressive and often regressive tax is the anomaly. In World War II, rich Americans paid a marginal rate of over 68 percent of their incomes in federal taxes, even after exploiting every tax loophole they could find. In the 1950s, under Dwight Eisenhower, the highest marginal rate was over 90 percent, and even after using all the deductions and credits, the rich paid almost 52 percent.
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