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Reich writes: "The wealthy have to pay their fair share of taxes. That's what the election was all about, and we won."

Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)
Portrait, Robert Reich, 08/16/09. (photo: Perian Flaherty)

8 Principles to Guide Democrats in the Fiscal Cliff Showdown

By Robert Reich, Robert Reich's Blog

03 December 12

emocrats, here are eight principles to guide you in the coming showdown over the fiscal cliff:

ONE: HOLD YOUR GROUND. The wealthy have to pay their fair share of taxes. That's what the election was all about, and we won. It's only fair they pay more. They're taking home record share of national income and wealth, and have lowest effective tax rate in living memory.

TWO: NO DEAL IS BETTER THAN A BAD DEAL. You're in a strong bargaining position. If you do nothing, the Bush tax cuts automatically expire in January, and we go back to rates during Clinton administration. Which isn't such a bad thing. As I recall we had a pretty good economy during the Clinton years.

THREE: MAKE REPUBLICANS VOTE ON EXTENDING THE TAX CUTS JUST FOR THE MIDDLE CLASS. After all the Bush tax cuts expire, have Republicans vote on an extending the Bush tax cut just for the middle-class. If they refuse and try to hold those tax cuts hostage to tax cuts for the wealthy, it will show whose side they're on. They'll pay the price in 2014.

FOUR: DEMAND HIGHER TAX RATES ON WEALTHY, NOT JUST LIMITS ON DEDUCTIONS. Don't fall for Republican offers to limit some tax deductions on the wealthy. Demand we go back to higher tax rates on the wealthy and eliminate their unfair tax loopholes, so they truly start paying their fair share.

FIVE: DON'T CUT SAFETY NETS. Don't sacrifice Medicare or Social Security, or programs for the poor. Americans depend on these safety nets and can't afford any benefit cuts.

SIX: DON'T CUT INVESTMENTS IN OUR FUTURE PRODUCTIVITY. Education, basic R&D, and infrastructure aren't spending; they're investments in our future prosperity. If the return on these investments is greater than the cost, they ought to be made, period.

SEVEN: CUT SPENDING ON MILITARY AND CORPORATE WELFARE. You want to cut, cut spending on the military - which now exceeds the military spending of the next 13 largest military spenders in the world combined. And cut corporate welfare - support to agribusiness, oil and gas, Big Pharma, big insurance, and Wall Street.

EIGHT: PUT JOBS BEFORE DEFICIT REDUCTION. Finally, Don't cut the budget deficit as long as unemployment remains high. Otherwise you'll cause the economy to contract, making the deficit even larger in proportion. That's the austerity trap Europe has fallen into. We need to create American prosperity, not European austerity.

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+86 # PGreen 2012-12-03 15:03
This is a minimum agenda; it is the least that we the people can expect of the Democratic party and the president. It is also very doable, in that both the political capital and public support exists to accomplish these eight principles.
There are a lot of other items (perhaps not directly referred to as the "Ficsal Cliff," but worthwhile) that could be mentioned such as restoring Glass-Stegal, but these eight are all good. Nice proposal.
+19 # Rita Walpole Ague 2012-12-04 05:23
Yes, PGreen, and how do you suppose we can get this proposal into the hands of a certain re-elected Pres. Obama? Perhaps it should be retitled:

"The People's Eight Commandments".

Prof. Reich, can you figure a way to get these 'all good' requirements hand carried to the White House? Maybe via Michael Moore?
+20 # PGreen 2012-12-04 09:28
I think that the president already knows these principles. They articulate a peoples agenda and we should expect him to follow through on them. Obama may not follow the public interest in this, but that would say something about what he is really trying to do in office (would it not?) My point is, that the corporate/elite opposition to these principles is no longer an excuse for the president not to follow them-- he has the power to overpower their influence.
You ask what you can do? I suggest that you start by writing your congressmen, the newspapers and blogs. You can probably think of other strategies if you put your mind to it. :)
+23 # Lolanne 2012-12-04 10:37
Quoting ritaague:
Yes, PGreen, and how do you suppose we can get this proposal into the hands of a certain re-elected Pres. Obama? Perhaps it should be retitled:

"The People's Eight Commandments".

Prof. Reich, can you figure a way to get these 'all good' requirements hand carried to the White House? Maybe via Michael Moore?

I've decided this year to actually write a personal letter about issues that I feel strongly about instead of just signing petitions. There are millions of us -- imagine if enough of us did that to literally bury the White House under an avalanche of mail! I don't think that could be ignored.

Print the article and mail it to the President, along with a brief cover letter endorsing its contents.

Barack Obama, President
1600 Pennsylvania Ave., NW
Washington, DC 20500
+2 # Rita Walpole Ague 2012-12-05 05:22
Certainly worth a try, Lolanne. However, I have, most unfortunately, seen how this Pres. (for whom I was elated to see elected in '08, then had to hold my nose as I voted for in '12) clearly bows down and caves into those in power/control, over and over again. So.....

I think we certainly do need to press hard on Oh Bomb Ah to push him into doing justice for all (peace attached). But, keep in mind we must that his m.o. is to allow himself to be pressed/pushed by those in power, and/or with clout. Guess that's how Michael Moore came to mind. Think we the sheeple have already pushed, many of us, as hard as we can, by casting a vote for him. But, speak up and out we must. Lots and lots we've gotta do to.....UNDO THE COUP!
-20 # wantrealdemocracy 2012-12-04 11:11
This is not the minimum that people can expect of the Democrats---thi s is the MAXIMUM that they will even consider--and wait and see. They will cave. You get what you vote for---more evil and greed and more pain and suffering for the working people of this nation. You voted for Obama? and what did you get? Maybe it is time to question your loyal support of this corporately funded political party that don't give a hoot about you or your family.
+7 # PGreen 2012-12-04 13:41
Quoting wantrealdemocracy:
This is not the minimum that people can expect of the Democrats---this is the MAXIMUM that they will even consider--

The two are not mutually exclusive. And why do you think that I have loyal support for the (Democratic) "corporately funded political party"? Yes, I think that Obama was preferable-- not good, but preferable. The Republican agenda is dangerously extreme, bad enough to merit voting against them, even when the realistic alternative isn't much better. But I thought that people not residing in swing states should vote 3rd party. I certainly empathize with people voting Green (Jill Stein.)
Or are you speaking rhetorically?
+1 # engelbach 2012-12-05 09:26
You don't state what your position is. Are you in favor of a Third Party, or are you supporting the GOP?
+65 # bachuill 2012-12-03 15:18
social security and medicare contributions on all income solves the entitlement problem and a lot of the unfair taxation issues also
+18 # BradFromSalem 2012-12-04 08:03

It does nothing to fix "unfair" ineffective taxation. As it stands, whether we expand it out to all income levels or not the payroll tax to support Social Security and Medicare is still regressive. The income tax is almost flat enough to be regressive. A special lower rate for unearned income is regressively, regressive. Taxing people at below poverty levels for Social Security and Medicare is regressive, and lastly having an employment based health insurance model of healthcare instead of a taxpayer based single payer system is downright deadly as well as regressive.
+18 # engelbach 2012-12-04 09:58
A good post, and I agree with it all.

However, as a first step, extending FICA to all income levels will fix Social Security for a long time to come and prevent Congress from getting its hands on it.
0 # Hey There 2012-12-07 00:24
hHighttps://www tch?v=G4D1yeMfR Bk
0 # engelbach 2012-12-07 16:09
I found that video to be a piece of populist propaganda, patronizing in tone and devoid of a believable analysis.
+22 # 2012-12-04 16:17
+8 # mdhome 2012-12-05 07:30
+96 # Tje_Chiwara 2012-12-03 15:25

No salary Cap for SS and Medicare taxes!

Investment income not singled out for preferential tax treatment over the salaried worker.
+16 # tpmco 2012-12-04 00:28
Add in a net worth tax surcharge until the debt is repaid, and I think we might be able to really cut the income tax rates.
+14 # Tazio 2012-12-04 00:37
Three great ideas!
+82 # TrueAmericanPatriot 2012-12-03 17:49

Since they don't want to raise taxes, LET THE RATES EXPIRE! THIS is the line I am drawing in the sand! 'Nuff said!
+91 # 666 2012-12-03 20:21
return to the Eisenhower era tax rates for the wealthiest americans!!!
+3 # bingers 2012-12-05 00:17
Quoting 666:
return to the Eisenhower era tax rates for the wealthiest americans!!!

Or the Eisenhower rate which with loopholes was the same as the Kennedy rate.
-24 # RLF 2012-12-04 07:32
'Affordable care act" the name is a should be called the buy- insurance-at-wh at-ever-price-t hey-name-or-we' ll-fine-you act.
+19 # PGreen 2012-12-04 09:59
You may be right, but at least the ACA establishes the principle that all Americans have (deserve) healthcare. Healthcare should be considered a basic human right; once that principle is widely understood, it will be easier to make it more accessible, affordable, etc. The ACA may turn out to offer (minor?) improvements over what we have now. Perhaps it can be tinkered with; this may reveal how good the ACA really is.
As was said about health insurance companies during the healthcare debate, if you want to build an automobile, you don't start out mandating that they use a grand piano.
Vermont and half-a-dozen other states want exemptions from the ACA to establish statewide single-payer systems. If exemptions are allowed for this reason, these systems will likely be overwhelmingly successful, and other states may follow suit. This is certainly an agenda worth campaigning for, perhaps as referendums, and certainly in congress.
+11 # bingers 2012-12-05 00:18
The only thing wrong with the ACA is the 95 Republican amendments designed to destroy it.
+18 # engelbach 2012-12-04 10:00
ACA is a poor substitute for single payer, and the Democrats should be ashamed for letting Max Baucus carry the ball against single payer and the public option.

But right now ACA is all we have. Let's see if it works, as it did in Massachusetts.
+10 # bingers 2012-12-05 00:16
Thumbs up for all except the Clinton era rate, return to the Kennedy rate of 70% with no loopholes.
+13 # moreover 2012-12-03 22:59
I don't care about saying this in a nice way: The U.S. of A is a militaristic country through and through. The military kills abroad and at home. It ought to be cut to size.
Let's bring back the draft so that everybody, including the rich, will start hating the military.
The alternative is being eaten alive by this machine, similar to what happened to the Soviet Union.
+10 # Sweet Pea 2012-12-04 09:23
Even if we bring back the draft, the wealthy would conjure up a reason for their children to avoid it (Just as they did in other wars. A few thousand slipped to a physician could probably buy a medical deferment. A child could attend a university for many years with just a few thousand slipped to the right people. The wealthy haven't paid their fair share in lives and probably never will. If you don't like it, "Get Wealthy."
+8 # bingers 2012-12-05 00:20
Yeah, like Rush Limbaugh avoiding the draft for a boil on his ass.
+10 # engelbach 2012-12-04 10:01
No draft. Period. Punishing people into rejecting something is barbaric and will cost lives.
+13 # BradFromSalem 2012-12-04 10:23

You are absolutely correct about the US being a militaristic nation.

The cure is not to put more people in uniforms and give them guns. The cure is to get control of the Corporate mentality that is permeating all facets of government and society. The disenfranchised "underclass" would just become cannon fodder and pawns in the military expansion throughout the world. As long government is run by a cabal comprised by the three headed monster; Military contractors, Financial MoneyLenders, and the Burning Shit for Power fiends, the militaristic nature of the nation will remain intact.
+16 # Mickeyfilm 2012-12-03 23:25
This is a very realistic agenda. It's important we agree on this. Stay on this agenda or we will sink. I really disagree with the folks that don't consider this a middle ground. This is an excellant agenda, stick to these points.
Mickey Grant
+28 # Rich Austin 2012-12-03 23:36
As an FDR Democrat I find it somewhat of a stretch to use the words "principle" and "Democrat" in the same sentence. Today's "centrists" are yesterday's Reagan Republicans. No wonder we're in the fix we're in.

Having said all that, Reich is correct. Democrats must not give in to GOP sociopaths!
+13 # Carole Lutness 2012-12-03 23:50
Please sign the Petition "An Open Letter to President Obama" on He needs to know we need him to stand up for us.
+22 # epcraig 2012-12-04 00:25
Just a little trust-busting would be nice, too.
+12 # Cdesignpdx 2012-12-04 00:37
The Republicans want to bring the rest of us to our knees,
They can delusionally boast, "they pray at our feet."

Cut entitlements? Many beneficiaries still have teeth.
+13 # jky1291 2012-12-04 01:22
If Republicans insist on entitlement reform, by all means reform entitlements. Start by eliminating all exemptions of income subject to Social Security and Medicare taxation, including eliminating the cap on all income subjected to those taxes. Next, lower the Social Security retirement age back to 65 for 2 years to reduce the deficit and debt by creating millions of jobs to be filled by those currently collecting unemployment benefits which add to the deficit and debt, while the millions of new retirees would collect their Social Security benefits which do not impact either the deficit or debt in any way, except to serve as a massive boost to the economy, thus further reducing our fiscal concerns. I suspect that would lower the unemployment rate by at least 2%, but if someone has an expert analysis of this proposal, please enlighten us.
+23 # tapelt 2012-12-04 06:17
Tax capital gains at the same rate as other income.
+8 # Todd Williams 2012-12-04 06:53
Let the Bush era tax rates expire. Then watch the assholes go crazy! Grover's head will spin like Linda Blair's in the Excorcist! I say let's leap over the fiscal cliff! I can't wait!
+11 # Todd Williams 2012-12-04 06:56
One more thing. I can't wait to tell my few Rethug friends "you have only yourself to blame because you voted for those idiots."
+14 # tclose 2012-12-04 07:10
A good list by Dr. Reich. Short and sweet.

Dems - pay heed and hold the line. Tell the Repubs that winning the election has consequences.
+14 # RLF 2012-12-04 07:33
Deductions should also be on the table...they are why there are people in the Fortune 100 richest people that pay no taxes. Mortgage deduction on a third home????
+2 # dkonstruction 2012-12-05 09:30
Quoting RLF:
Deductions should also be on the table...they are why there are people in the Fortune 100 richest people that pay no taxes. Mortgage deduction on a third home????

Agreed RLF....Obama could and should include a cap on this deduction in the same way that he is proposing that taxes won't go up on the first $250,000 of income he could say that the mortgage tax deduction would only apply to the first xxxx amount of a mortgage but after that there are no deductions which would eliminate millionaires/bi llionairs taking huge deductions on their Mcmansions.
+10 # MichaelSSmithNJ 2012-12-04 09:25
I agree 99% the only part is in #2 because I am in the lowest tax rate and am now only paying 10% but if they go up I will have to pay 15% which while I could do it is going to make things harder for me since I am a part time worker at $9.05 an hour and that extra money is a big help to me I would actualy suggest that anyone who earn less than $25,000 a yeare should have to pay NO Taxes at all for a least a year and I think that we should acutlay put off deficit reduction for a year or until the unemployement rate is below 6.25%
+5 # dkonstruction 2012-12-04 11:43
The missing piece in this whole deficit discussion is why the federal gov't has to borrow (at interest) at all from private financial institutions? What we are now "paying back" is not the principal borrowed but rather the interest that "we" (the gov't) is being charged by those we borrow from. Since the US gov't has the ability to print its own money it can thus "borrow" from itself at 0% interest not to mention the fact that the funds "borrowed" then are paid back to the gov't (i.e., ourselves) which means that this functions more like a revolving loan fund that is replenished as borrowed monies are paid back.

There is a growing movement on the state level to create state banks (along the lines of the state bank of north dakota) but the same initiative needs to be taken up at the federal level.

We should never have to borrow funds at interest from others. A sovereign gov't that controls its own currency never has to and never should do this (this is the problem for Greence and others in the "eurozone" that are having economic/debt problems i.e., the individuals do not control their own currency since they are part of the euro).

We need for people like Reich, Krugman, Stiglitz and others to start championing the notion of "public banks" as part of the solution to our debt/deficit problems and end the lunacy of the US gov't borrowing from Wall Street or any other private financial institutions or gov'ts.
+3 # BradFromSalem 2012-12-04 13:18

You have been pushing the idea for awhile now. It does make a lot of sense, but there are pitfalls as well.

On the plus side, it gets us away from making all spending over "budget" a wealth transfer from the Federal Government to Treasury note holders. Who as I am sure you know, the Chinese are nothing more than a straw man for the real holders of those the bonds; the 1%, of course. Secondly it provides the government with a ready source for funding infrastructure and other all other necessary government expenses.

The danger is the tendency of humans to spend "free" money with abandon. As I have repeatedly asked the folks that are always clamoring to lower taxes, what point is too low. I will ask the same question of you, at what point have we "printed" so much money that it becomes worthless?

Everything has limits, and I believe that was probably part of the thinking that went into turning over the printing of money function to the Federal Reserve (e.g. bankers).

So, in short; I would whole heatedly agree that the Federal Reserve system needs to be overhauled and in some manner nationalize it and/or parts of the current banking industry.

I don't claim to know the answers here. but I am always leery of any solution that is not tempered by an opposing force and that is essentially what worries me about your proposal.
+2 # dkonstruction 2012-12-04 14:50
Hey Brad,

You raise an important issue ("at what point have we 'printed' so much money that it becomes worthless?") that needs to be addressed in all of this.

I guess my short answer is that it is one of the questions i am trying to work through (have been reading these very interesting "modern monetary/money theory" folks who have a unique take on all of this) in my own head so i'm not sure i have an answer for you at this point but i agree it is a question that "we" (progressives) need to be able to answer/respond.

My main point though, and why this has become one of my mantra's of late (and so you're right i am repeatedly pushing this idea here and elsewhere in the hopes of generating more awareness and discussion) is that whatever level of spending there is and whatever "borrowing" the gov't has to do one of the biggest problems is the gov't borrowing at interest which costs us when it doesn't have to if the gov't prints/borrows money from itself.

Last point i guess is that i don't see public banking as "the solution" and so i temper this suggestion with that and with the recognition that there are many other things that need to be done at the same the same time, i do not see any "solution" without a public banking component both in terms of how we pay for the stuff we want to fund as well as taking some measure of control back and away from "wall street" and the private banksters more broadly.
+3 # dkonstruction 2012-12-04 15:27
The Modern Money Theory folks argue (if i am understanding them correctly...sti ll making my way through their stuff) the answer to your question about how much money is enough/too much has to do with how much money is needed to employ everyone and provide sufficient income to purchase and consume the goods and services they need to live a decent life...they argue, i think, that if this is the measure than running a deficit is completely irrelevant in a fiat money system where the state has control over its own currency...stil l trying to understand their rap on inflation...but i think this is at least in part their answer to your question (doesn't mean it's right of course but so far i have found their work intriguing).

i guess one concrete "temper" and "opposing force" to my call for public banking is the recognition that just because the banks would be "publicly owned" this means some arm of the fedreal gov't and i have no illusions as to which side "the state" as a whole is on (or both major parties for that matter) which means that even if we get public banking we will still need to have built a powerful enough movement to ensure that these "public" financial institutions make the kind of investments that actually benefit "the public" easy task for sure.
+2 # BradFromSalem 2012-12-04 19:07

Thanks for the tutorial. At first blush it does seem to be a workable idea, that as with any good idea will require tweaking in the real world. I wonder if public banking should compete in the marketplace for business outside of government or not. There are a lot of variables and options, but any enabling legislation must have some hard restrictions and limits, instead of handing that responsibility off to some agency within the Treasury? department.
+3 # dkonstruction 2012-12-05 09:28
Brad, there are now 7 or 8 states that have legistlation pending in some form to create state banks along the lines of the state bank of north dakota which has been very successful. the first thing it means is that the states don't have to go to wall street or the private bond markets to fund their own infrastructure projects for example; they can borrow from themselves.

for me it is not so much that public banks compete against private ones so much as it is a way for us to separate the two and to create financial institutions that function more like public utilities (although i fully recognize that many so-called "public" utilities are anything but) whose mission is to provide a needed service (in this case financing) rather than to maximize profit or "shareholder value". since i am dubious about ever being able to "regulate" or reign in the private financial institutions i think a much better strategy is to try and go around them and create alternative institutions that hopefully "we" will have a much better chance to control (though here too i have no illusions about this being an easy battle).

It's also about trying to get control of existing resources that in theory are ours i.e., investing public monies in public projects through publicly owned/controlle d financial institutions.

I think a good place for us all to start is to get a better understanding of how the state bank in north dakota is working since it provides a real world model.
0 # BradFromSalem 2012-12-05 14:59
The other thing to look into is what happened in the past when we had a federal bank. Especially what worked, and what is different. I do know a big difference is that we got rid of basing our currency on how many shiny rocks we had hidden in a vault somewhere.
+5 # bingers 2012-12-05 00:24
At least restore the usury laws with jail for every executive working at an institution charging over 10% interest for anything. Especially now that they borrow from the Fed at a near zero rate.
+4 # fredboy 2012-12-04 11:44
Nine (and one that might work), fairness and equity. No one can argue with that.
+5 # BradFromSalem 2012-12-04 13:44

Republicans will argue and have argued against fairness and equality.

It won;'t work, sad to say.
+1 # fredboy 2012-12-04 16:29
BradFromSalem, if that's the case, then let's all keep whining and bitching and moaning. It's great for our national image.
+3 # BradFromSalem 2012-12-04 19:01

I was using humor to make the point that the Republicans will not co-operate in using fairness and equality as a guiding principle. All that means is that the Democrats (and Bernie) have to take on that responsibility themselves.
-1 # FDRva 2012-12-07 02:14
If only "progressives" had principles!

Then there would be no Obamacare/Romne ycare subsidies for HMO insurance companies as enacted under the president's ACA.

HMO insurance companies, nowadays, are all owned by Wall Street and London financial combines--which every Democratic whore well knows. Barney was never very Frank about that.
+1 # engelbach 2012-12-07 16:03
Not completely true. Many HMOs are non-profit.

My HMO in New York charges me no extra premium on my Medicare for full coverage, including prescription drugs.

The ACA subsidy has nothing to do with whether or not an insurance company is an HMO.

I'm no fan of either ruling class party. But even I consider "Democratic whore" to be out of line, as it implies that all Democrats are whores.
+4 # Rick Levy 2012-12-05 01:25
In short, the Demos, especially Obama, need to grow a pair this time around.
0 # independentmind 2012-12-06 15:58
Yes we should have entitlement reform - all trades need to taxed, all capital gains need to be taxed at the same rate as income. all corporations should be taxed heavily on all profits over 10%.
-1 # FDRva 2012-12-07 02:03
President Obama has much to fear from his 'friends' in the financial/intel ligence community.

The sale completed--some might find the salesman expendable.

I was never an Obama partisan--but I am an admirer of the US Constitution--a nd I dislike violent coups.
+1 # RMDC 2012-12-09 09:08
The first thing democrats need to do is learn to reject the PR terms of republicans. "Fiscal cliff" is a term of thought control. the term invokes a "frame" -- i.e. immediately impending catastrophy, going off of a cliff. So people are propelled to act because of the frame that comes with the term, not because of the economic conditions.

Actually a rise in taxes on the wealthiest people and a cut in defense spending would be very good to the US economy. An increase in taxes on the middle class would not be good but it would be OK. Cuts in

Naomi Klein's Shock Doctrines tells how this all work -- create a crisis and then enact policies that benefit the very rich and would not be possible under non-crisis conditons. What republicans want is cuts in so-called "entitlement" programs like social security, workers compensation, medicare or anything that government spends that helps people. Cuts here would be a true disaster, a real humanistic cliff.

Social security and medicare do not contribute to the deficit or debt, but republicans and thier tools say they do every day. Obama evens says they do. Obama is just too weak and stupid to see through what is beign done to 99% of the american people.

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