Jeff Madrick had it right on “Countdown” Tuesday night: “We’ve got to raise taxes not to balance the budget but to reinvest in the economy. We have been neglecting this for a few decades now.” Madrick, whom I first knew as a Business Week reporter decades ago, has just published Age of Greed: The Triumph of Finance and the Decline of America, 1970 to the Present.
It’s infrastructure we need to be spending on, not bigger yachts.
(In related news, it was reported that Americans are consuming 570 more calories a day, on average, than in the 1970s. More and more of us have grown fat. We are out of shape personally and as a country, competing against nations with high savings rates and modern infrastructure.)
The 35 years after World War II were not terrible for America – Ozzie and Harriet had good happy lives in the Fifties and Sixties, as did many of their viewers – including their wealthy viewers. (The top federal tax rate was 90% on interest and dividends, 36% on long-term capital gains.) Mary Tyler Moore had a good life in the Seventies, as did many of her viewers – including her wealthy viewers. (The top rate was 70% on interest and dividends, 28% on long-term capital gains.)
During those 35 years we built the Interstate Highway System (putting a lot of people to work, productively) and funded the Marshall Plan and launched the Peace Corps and put a man on the moon – and we worked the National Debt down gradually from 121% of GDP in 1946 to just 30% when Ronald Reagan and George Bush took over in 1981 and began our long fiscal decline, handing Barack Obama a debt they had taken back up to 100% of GDP, plus a $1.5 trillion deficit, two wars, deteriorating infrastructure, and an economy on the brink of Depression.
It’s time to get back to taxing rather than borrowing to fund the investments we need to make to keep our country strong, healthy, and competitive. And to make those investments.
No one is suggesting we go back to 90% or 70% top tax rates. But couldn’t we let “the Bush tax cuts” expire as, by law, they were scheduled to?
Quote of the Day
Every debt is ultimately paid, if not by the debtor, then eventually by the creditor.~Jim Grant
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