President Obama’s new budget is, well, audacious -- not just because it includes several big, audacious initiatives (universally affordable health care, and a cap-and-trade system for coping with global warming, for starters) but also because it represents the biggest redistribution of income from the wealthy to the middle class and poor this nation has seen in more than forty years.
...
Although we don't have details as yet, the President's health-care proposal is likely to include substantial subsidies for lower-income families. In addition, let's hope the expanded Earned Income Tax Credit now in the stimulus bill will continue beyond 2010, as well as the refundable Child Tax Credit, enlarged Food Stamp program, larger Title I for poor school districts, and expansion of Pell Grants. (So are, no clear signal on this.)
...
It's about time a presidential budget uneqivocally redistributed income from the very rich to the middle class and poor. The incomes of the top 1 percent have soared for thirty years while median wages have slowed or declined in real terms. As economists Thomas Piketty and Emanuel Saez have shown, in the 1970s the top-earning 1 percent of Americans took home 8 percent of total income; as recently as 1980 they took home 9 percent. After that, total income became more and more concentrated at the top. By 2007, the top 1 percent took home over 22 percent. Meanwhile, even as their incomes dramatically increased, the total federal tax rates paid by the top 1 percent dropped. According to the Congressional Budget Office, the top 1 percent paid a total federal tax rate of 37 percent three decades ago; now it's paying 31 percent.
Fairness is at stake but so is the economy as a whole. This Mini Depression is partly the result of a widening gap between what Americans can afford to buy and what Americans when fully employed can produce. And that gap is in no small measure due to the widening gap in incomes, since the rich don't devote nearly as large a portion of their incomes to buying things than middle and lower-income people. The rich, after all, already have most of what they want.
Friday, February 27, 2009
Obama's Budget Gets a Thumbs Up
Here's bits from a blog entry by Robert Reich (Clinton's Secretary of the Treasury) about Obama's budget:
Subscribe to:
Post Comments (Atom)
2 comments:
Taxing the rich at 100% won't pay for Obama's budget. The Wall Street Journal has reported that taxing the rich at 100% won't pay for Obama's budget. Barack Obama promised not to raise taxes on anyone making under $250,000 per year. Where is he going to get the money? The numbers indicate Obama will need to take 100% of the income of everyone making over $75,000.
The US has a serious economic problem (as does a lot of the world). A depression seriously distorts government finance. But attacking Obama's budget as "unrealistic" or "taking 100% of the income of everyone making over $75,000" is inflammatory and follows a head-in-the-sand approach to "problem solving" in these tough times.
First, how serious is the budget problem?
Here's a bit from a study published by the Brookings Institute here:
"CBO’s baseline projects 2009 revenues of 16.5 percent of GDP and expenditures of 24.9
percent of GDP. Incorporating the stimulus package, these percentages would be 16.1 percent
and 25.7 percent, respectively. This represents the highest expenditure share of GDP since
1945, and a revenue share that has been lower only once since 1950. The gap between revenues
and expenditures, the deficit, will be the highest as a share of GDP since the end of World War
II. Debt held by the public will rise to 50.5 percent of GDP in 2009, the highest since 1956."
Second, how much income would have to be confiscated by the government to cover the budget?
Here's a report from the Federal Reserve (which is less political and less inflamatory that the notorious Wall Street Journal). You can look at table 1 on page A5 of this report.
The top decile (i.e. from 90% to 100% of incomes in 2007 averaged $397,700. Doing some rough guesswork, there are 3 million Americans, assume 3 persons per family, that means 100 million families. So the top 10% represents 10 million families, so their total income is 10 million * $397,700 = $4 trillion (roughly).
Using the CIA Factbook the US economy is $14.6 trillion. So the Brooking Institite says the budget shortfall will be 9% of GDP ((the difference between revenues of 16.5% of GDP and expenditures of 24.9% of GDP is roughly 9% of GDP), so that is roughly $1.3 trillion.
So, rather than your hysterical claim that 100% of all income of everyone making more than $75,000 a year would be needed, the reality is:
(a) The budget shortfall could be financed by 1/3 of the income of the top 10%.
(b) The whole government expenditure of 25.7% of the GDP, i.e. $3.75 trillion would only consume 90% of the income of the top 10% of families.
This shows that you simply picked numbers out of the air -- scary numbers -- to try and stampede people away from Obama. You are guilty of lying to achieve your own political ends. You are part of the right wing plot to manipulate people into policies you favour by using fear tactics. You should be ashamed of yourself!
The reality is that the burden of government is carried across all social classes, but under a progressive agenda those who have more pay more. The cost of government is the cost of civilization.
You are part of that crowd of "lemon socialists" who believe that others should bear the cost of government until you run into a problem (like the Wall Street bankers) and suddenly you want the floodgates to open and shower you with tax dollars for your benefit. Hypocrite!
The reality is that taxes pay for the infrastructure that makes society possible. To expect somebody making the minimum wage to take 20% of their very hard earned money to pay "their share" of taxes and claim this is equivalent to taking 20% from a hedge fund manager who made $1 billion is a mockery of justice. Taking $1,200 from somebody making $12,000 is not the same as taking $100 million from somebody making $1 billion. The leftover $10,800 is hard to "budget" to feed a family. But the leftover $900 million lets you live a very, very, very comfortable life.
So quit lying about taxes and the budget and Obama's goals. Spend a little time looking for real facts before you run off making wild accusations! Stop your evil political manipulations of people through lies and fear mongering!
Post a Comment