The Great Recession accelerated trends starting three decades ago — outsourcing abroad, automating work, converting full-time jobs to temps and contracts, undermining unions, and getting wage and benefit concessions from remaining workers. The Internet and software have made all this easier.This is all wonderful stuff and of course Obama won't do it because Obama knows which side of his bread is bettered. Obama, like all politicians, gets his money from the ultra-rich and corporations. Consequently, his loyalties lie with his pay packet.
He should point out that the U.S. economy is now twice as large as it was in 1980 but the real median wage has barely budged. Most of the benefits of economic growth have gone to the top. In the late 1970s, the richest 1 percent of Americans got about 9 percent of total income. By the start of the Great Recession they received more than 23 percent. Wealth is even more concentrated.
This is the heart of our problem. Most Americans no longer have the purchasing power to get the economy moving again. Once the debt bubble burst, they were stranded.
The President should make it clear corporations aren’t to blame. After all, they’re designed to make profits. Nor is it the fault of the rich who have played by the rules. The problem is the rules need fixing. He should stress that a future with no jobs or lousy jobs for most Americans is not sustainable - not even for American corporations, whose long-term profitability depends on the revival of broad-based domestic demand. (Watch out for the upcoming “correction.”)
The solution is to give average Americans a better economic deal.
For starters, he should propose to expand the Earned Income Tax Credit (essentially, a wage subsidy) all the way up through the middle class. And he should make the tax system more progressive: The rate on the first $50,000 to $90,000 of income should be cut to 10 percent; the next $90,000 to $150,000, 20 percent; and the next $150,000 to $250,000, 30 percent. Make up the revenue by increasing taxes on the next $250,000 to $500,000, to 40 percent; from $500,000 to $5 million, to 50 percent; and anything over $5 million, 60 percent. Tax capital gains the same as ordinary income.
In addition, he should call for strengthening unions by increasing penalties on employers who illegally deter them.
I found this statement by Reich to be disingenuous:
Importantly, he should make it clear this isn’t redistribution. These measures would be good for everyone. Rich Americans will do better with smaller share of a rapidly-growing economy than a large share of one that remains in a deep hole.The latter part of the statement is true. But Reich knows that the claim that "this isn't redistribution" is just plain wrong. It is redistribution. More taxes will have to come from those who have benefited from big tax cuts over the last 30 years. The "redistribution" needed is to get the tax burden back to where it was during the golden years of US growth, the era from the late 1940s through to the early 1970s. Pretending that your social policies aren't redistributionist only makes you look silly.