The Rich Get Richer

ON THE COVER OF THE ROLLING STONE

My favorite part of the interview:

ROLLING STONE: What do you think the Republican Party stands for today?

THE PRESIDENT: Well, on the economic front, their only agenda seems to be tax cuts for the wealthiest Americans. If you ask their leadership what their agenda will be going into next year to bring about growth and improve the job numbers out there, what they will say is, “We just want these tax cuts for the wealthiest Americans, which will cost us $700 billion and which we’re not going to pay for.”

Now what they’ll also say is, “We’re going to control spending.” But of course, when you say you’re going to borrow $700 billion to give an average $100,000-a-year tax break to people making a million dollars a year, or more, and you’re not going to pay for it; when Mitch McConnell’s overall tax package that he just announced recently was priced at about $4 trillion; when you, as a caucus, reject a bipartisan idea for a fiscal commission that originated from Judd Gregg, Republican budget chair, and Kent Conrad, Democratic budget chair, so that I had to end up putting the thing together administratively because we couldn’t get any support – you don’t get a sense that they’re actually serious on the deficit side.

☞ There it is, folks. And the irony is, at least one survey showed nearly two-thirds of the folks who make more than $250,000 a year think they should pay more to help meet the nation’s crisis. It’s called responsible citizenship. Or, perhaps, ‘love of country.’

THE RICH GET RICHER – ESPECIALLY AFTER TAX

In 1979, high-income folks were certainly doing better than the rest of Americans – which is exactly how it should be. A society where achievers and risk takers and savers don’t fare better than slackers and squanderers is a society that can’t possibly thrive. But just how much better should the high-income folks live? (And whom should we paying the high income to: mortgage brokers or master teachers?) You can say ‘the free market will make these decisions best if left to its own devices’ – look how well it functioned in setting the right prices for residential real estate and rewarding those who packaged sub-prime mortgages – but whatever your view, it’s still interesting to consider the facts.

According to this from the Center on Budget and Policy Priorities, there has been a big shift in favor of the best-off since 1979.

. . . the average middle-income American family had about $9,000 less after-tax income in 2007, and an average household in the top 1 percent had $741,000 more, than they would have had if the 1979 income distribution had remained.

. . . Fully two-thirds of the income gains in the last economic expansion (2001-2007) flowed to just the top 1 percent. This is not a healthy sign for a society. As Professor Thaler urges, we need to decide whether we want to promote still-greater inequality (by extending the high-income tax cuts) or lean against this trend. Each year the average millionaire gets about $125,000 from the Bush tax cuts, according to the Urban-Brookings Tax Policy Center. Now seems to be a good time to say enough is enough.

Should we conclude that the top 25 hedge fund managers – who collectively earned $25.3 billion in 2009 – are producing so much value for society that we shouldn’t tax them back at the old Clinton/Gore rates?

Coming: Kiwifruit and Something Positively Thrilling