The economic challenge of the Obama administration is not just getting American’s back to work, lowering the deficit, or lowering the cost of health care. It’s eliminating the doctrine of Reaganomics. Reaganomics is the idea that giving tax cuts to the wealthy would trickle down to the rest of the economy. Under Reagan the tax rate for the wealthiest Americans was reduced from 70 percent to 28 percent in seven years. Wealth did not trickle and the gap between rich and poor increased. Former President George H.W. Bush once called the doctrine Voodoo economics because he rightly thought it was a fiction.
His son George W. Bush had no such reservations in pushing through tax cuts for the wealthy in 2001. This coupled with an unnecessary war in Iraq is the primary reason for the record budget deficit that the new Obama administration has to deal with. Now can anyone truly say that it did not matter who won between Gore and Bush? Under a President Gore no tax cuts for the wealthiest Americans who do not need it, no war in Iraq, no deficit, a cleaner environment, no rightward swing in the Supreme Court.
Americans need a new economy. The American economy must not only recover it must recover differently than the previous economic cycles. An economy that works for everyone not just the top 1 percent whose increase of an American wealth has skyrocketed since the dawn of the tax cuts for the rich era. The most frustrating is that these individuals and corporate CEO’s and board of directors, when they were at the cusp of bankrupting the American economy forced the Congress to bail them out under President Bush, with no strings and no oversight. They are using American tax payer dollars on their vacations, their private air craft, to pay absurd bonuses. How can one get a bonus when they run the company into the ground? How can they get a bonus when its not through profit earned but simply from the U.S. Treasury? It’s a crime.
It’s not just about decreasing the millions of dollars executives receive in compensation. The persistent argument against decreasing executive pay seems to the idea that the executives would leave and go elsewhere. But where? How could any of the executives that brought about the near collapse of the world economy get work again? Why aren’t they the ones who are unemployed? Why aren’t some of these executives and understudies being charged with defrauding the market and their shareholders with the creation and use of high risk derivatives.
So-called Teabaggers and the like are pointing there fingers in the wrong direction. It wasn’t the Democrats who were in control from 2001-2007 it was the Republicans. The Republicans and their tax cut ideology that has nearly bankrupted the United States. And destroyed the middle class. It was George W. and Secretary Paulson that forced through the bailout of the financial firms with no oversight or regulation. If the Teabaggers would join with the progressive economic left in demanding stronger financial regulation, demanding payback of all TARP funds it could be the the one thing that scares the aristocratic class the most, lower and middle class whites joining with their economic brethren on the left.
In order to rebuild the American middle class, provide for public education of the 21st century, new roads, new transportation, free health care, free or near free college education American’s are going to have to pay for it. The American tax rate particularly at the highest levels need to return to not just the Clinton era which produced an increase in the growth of the middle class but to a pre-Reagan era tax rate. Oprah recently reported that Denmark was among the happiest countries on earth. It also has one of the highest tax rates around 60 percent (still lower than pre-Reagan American tax rates). But the people are provided with free health care, women can get a year off of work with pay when having a child, unemployment is paid up to 90 percent of your former salary and for up to four years, college education is not only free but students are given a stipend. Students graduate with no debt so they are free to pursue the career of their choice not merely the most profitable. America must return to a course that brings about economic equity, an economy that one can pursue happiness, and not have to put it on a credit card.