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Robert Reich begins: "More than thirty years ago, Ronald Reagan came to Washington intent on reducing taxes on the wealthy and shrinking every aspect of government except defense. The new tax deal embodies the essence of Reaganomics."

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

Reaganomics Redux

By Robert Reich, Robert Reich's Blog

17 December 10


The New Tax Deal: Reaganomics Redux

ore than thirty years ago, Ronald Reagan came to Washington intent on reducing taxes on the wealthy and shrinking every aspect of government except defense.

The new tax deal embodies the essence of Reaganomics.

It will not stimulate the economy.

A disproportionate share of the $858 billion deal will go to people in the top 1 percent who spend only a fraction of what they earn and save the rest. Their savings are sent around the world to wherever they will earn the highest return.

The only practical effect of adding $858 billion to the deficit will be to put more pressure on Democrats to reduce non-defense spending of all sorts, including Social Security and Medicare, as well as education and infrastructure.

It is nothing short of Ronald Reagan's (and David Stockman's) notorious "starve the beast" strategy.

In 2012, an election year, when congressional Democrats have less power than they do now, the pressure to extend the Bush tax cuts further will be overwhelming.

Worse yet, the deal adds to the underlying structural problem that caused the Great Recession in the first place.

Since Ronald Reagan was president, median hourly wages have barely budged, and America's vast working and middle classes have taken home a steadily smaller share of the nation's income (adjusted for inflation). The typical male worker today is earning less than the typical male worker thirty years ago.

Yet the richest 1 percent of Americans is now taking home a larger percentage of the nation's income than at any time since 1928. And we recall what happened in 1929.

Unless the vast majority of Americans has enough purchasing power to keep the economy going without going ever more deeply into debt, the economy will eventually go over a cliff.

That's what happened in 1929 and 2008.

By the late 1990s the middle and working classes could keep spending - and thereby keep the economy moving - only by adding debt. This strategy ended when the housing bubble burst in 2007.

Without their spending, there can be no buoyant recovery.

Yes, the pending tax bill will give America's middle and working classes slightly more cash next year. But only for one year. They won't spend it. They'll use it to help pay down their debts.

Will lower taxes on the rich spur them to create more jobs? Not a chance. Since 1980, Reagan's supply-siders have said lower taxes on the rich will trickle down to everyone else. Nothing could be further from the truth.

Look at history.

During the almost three decade spanning 1951 to 1980, when the top rate was between 70 and 92 percent, the average annual growth in the American economy was 3.7 percent.

Between 1983 and the start of the Great Recession, when the top rate ranged between 35 percent and 39 percent, average growth was 3 percent.

Supply siders are also fond of claming that Ronald Reagan's 1981 tax cuts caused the 1980s economic boom. There is no evidence to support this claim. In fact, that boom followed Reagan's 1982 tax increase. The 1990s boom likewise was not the result of a tax cut; most of it followed Bill Clinton's 1993 tax increase.

Nor did George W. Bush's tax cuts trickle down. Between 2002 and 2007 the median wage actually dropped. And Bush's record of job creation was pathetic relative to Bill Clinton's, when taxes were higher. Under Clinton, America added 22 million net new jobs. Under Bush, barely 8 million.

So why are Democrats voting for Reaganomics?

They say they have no choice - either vote for this or watch taxes rise on everyone starting January 1.

That Democrats have allowed themselves to get into this fix is a testament to either their timidity, obtuseness, or dependence on the campaign contributions of those at the top.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on and iTunes. your social media marketing partner


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+65 # Steve King 2010-12-17 20:01
Robert Reich has hinted at something that I firmly believe. Lowering taxes on the super-rich will only continue the slide of American economic growth. However, raising their taxes would actually increase growth in the economy. He is absolutely right when he says that those in the top 1% will take that tax savings and invest it where they have the best return - overseas. On the other hand, if you look at the history of marginal tax rates as far back as the turn of the last century, you will see that the growth of the American economy was best when those rates for the wealthy were higher - the phenomenal growth during 50's and 60's when rates were the highest are the perfect example of what I am saying. When rates were lowered, as in the 20's, again in the 80's and in the past decade growth slowed and then the economy went backwards. It is my firm belief that tax reductions on the lower and middle class, giving them more cash to spend on consumables, and increasing taxes on the wealthy, forcing them to create new ways to make up for that shortfall in their income, will spuring the economy to recovery and to growth.
+11 # Harry Pope 2010-12-19 08:52
Professor Reich and you make a persuasive case that it's a mistake to expect the top 1 or 2 percent of earners to trickle down their wealth in any way that will raise the relative status of the middle class and those below the middle. The great majority of us won't see the benefits given to the wealthy because they will have better uses for the excess capital they will continue to accrue under the continuation of the "Bush tax cuts". We in the great majority are measured every ten years by the census, and we can check our profile in that mirror. But there's a lack of a mirror held up to the top 2 percent who are benefiting most from their position in and use of our capitalist system. Who are they? What demographic profile do they have? What businesses and professions provide their wealth? How much of it is inheritance and investment of inherited wealth? Reich says they will "spend only a fraction of what they earn and save the rest. Their savings are sent around the world to wherever they will earn the highest return." Where exactly will it go? What fraction actually goes to a buying influence to perpetuate the system that rewards them? To whom exactly are we giving the store?
+85 # banichi 2010-12-17 21:29
I am completely disgusted with the Democrats in Congress, as well as the President. I expect stupid behavior from the Republicans, masquerading as common sense. I have never been disappointed in that regard. Tax cuts, after all, only really help those who are making enough money to make a cut in the taxes they pay meaningful. That Democrats, the party I have supported most of my voting life, now show up as not just timid, spineless and divided, but actively helping the rich get richer out of a professed desire to gain a 'bi-partisan' agreement that actually only gives away the future, is more than disheartening. It is morally and ethically untenable. We, the people, have now been officially abandoned by the people we elected to defend us. They did not even try to fight hard against the passage of this shameful bill.

There is a new reality, folks. It is that Bernie Sanders, an Independent with mildly socialist leanings, was the only one who stood up to say this bill was wrong. He is the only one who stands out positively from the political crowd now.

Truly those who don't learn from the past, are doomed to repeat it. That's us as a nation.
+28 # michelle 2010-12-17 23:15
I plan to write in Bernie Sanders for president in 2012. The 'two' parties we have now are of no use to the people. I know Senator Sanders will not win but at least I will have my say in the matter. Maybe if those of you in Iowa can organize a movement for the Senator we might get somewhere.
0 # Darius 2010-12-22 15:54
@michelle Excellent suggestion ! Bernie Sanders For President. I AM FOR IT.

What do we do to get a movement ?

Should someone start a website ?
May be a facebook page ?
Any body ?
+22 # Steve Weinstein 2010-12-18 02:16
Robert and Stephen and Banichi, you've spoken my mind and heart.
So now what do we(individuals who care)do?
For the 1st time in my 68 years I have no vision of how we win. And I'm afraid I may not be alone.
+5 # tomo 2010-12-18 22:31
Steve, I know the feeling. There is no question in my mind that Obama was a Trojan Horse. He may not have realized it, but those who vetted him did. I'm not sure America can recover from eight years of Bush/Cheney, and now this. I'd suggest, Steve, you get to know your immediate neighbors, have block parties, plant a kitchen garden if you have not done so already, try to invite doctors and fire-personnel to come live in your community, attend to the education of the local young, and stockpile plenty of soup and soda crackers.
+25 # phrixus 2010-12-18 09:28
All excellent (and accurate) points. The really bad news is that it is now patently obvious (if it wasn't already), that the American public has been rendered helpless to affect what is a totally corrupt government. The naivete of the Tea Party and the not-so-radical mainstream American voter has been laid bare in the face of recent events. Mr. Obama (whom I voted for), ran on a platform of change yet his style of governance is one of capitulation, appeasement, cowardice and dissembling. We are watching (and experiencing, unfortunately) the unfolding of a failed presidency, different only in flavor from the debacle of the Bush administration. American politics is presently as corrupt as any third-world dictatorship. We've simply become more sophisticated at hiding the machinations behind the flow of corporate and special interest bribes to our elected officials via "lobbyists." Why assassinate the opposition outright if you can effectively neutralize them with money and lawyers? The "power of the ballot box" is a quaint anachronism in today's corrupt world. Whom do you vote for? Obama or Palin? Boeing or KBR? We are witnessing the death throes of American democracy.
+13 # Gwen Fortune 2010-12-18 12:03
Your, and similar comments, reflect my sentiment and conclusion. No need to say more. As the kid in the Terminix commercial said, "We're doomed," unless there can be a truly "Great Awakening!"
I understood the error of my/our ways with the appointments of Summers-Geithne r-Emmanuel. Downhill.
+5 # tomo 2010-12-18 22:37
These early appointments, Gwen, really were the clue. I can't understand that many Democrats still have not weighed their meaning. Instead of what Obama did on his own (apparent) initiative, so many of my friends continue to talk of what the Republicans have done to him. (Perhaps the smiling face of Mitch McConnell at the recent signing will help them see the light.)
+5 # tomo 2010-12-18 22:24
I think Obama should run again in 2012--as a Republican. It is terribly confusing and destructive that this man should have presented himself as the champion of Democratic causes.

In addition to Bernie Sanders, my local congressman, John Garamendi, is a hero in my eyes. He "kept his head while all around him others were losing theirs." I'd love to be able to vote for him as a replacement to Obama in 2012.
+12 # care 2010-12-18 00:20
My favorite Oblahblah shibboleth of the week:
We will grow demand and that will stimulate the economy. Hugh! I heard this before - remember Bush telling us to go out and buy some stuff.
My fervent hope is that Oblahblah will change parties and maybe a Democrat will run next cycle.
+7 # giraffe 2010-12-18 00:36
Banichi - Bernie Sanders ended up voting for the TAX DEAL - even though he spent those 8.5 hours talking.
Anthony Weiner, Rep from NY voted "NO" and explained why on Rachael Maddow show 12-17-2010.

The House and Congress - Dems/Reps must be bought and paid for by "something" -- to pass that TAX DEAL.

When the Republicans talk - they all sound like they have smoked something. But the Americans believe the crap - WHY?

The DEMS shouldn't talk about the good/right/mora l - begging -- they have to reply to the rhetoric of the Reps WITH FACTS (i.e. numbers, history, and stop talking like preachers)

For example they should say My friend on the other side of the isle: "You are entitled to your own opinion but not to your own facts" -- and then tell the FACTS- just like Reich did in this article.

Write and telephon your Congress people
+22 # Scott Galindez 2010-12-18 08:59
Quoting giraffe:
Banichi - Bernie Sanders ended up voting for the TAX DEAL - even though he spent those 8.5 hours talking.

Not true, Sanders was one of only 19 Senators to vote against the tax deal.
+3 # giraffe 2010-12-20 01:46
Got the name wrong -- Bernie Sanders voted against TAX DEAL - sry
+13 # David H Klassen 2010-12-18 15:42
To answer your question why people believe Republican crap, read George Lakoff's books. Lakoff's fundamental points: that people reason to a great extent through metaphors, that when facts seem to contradict their metaphors, most people keep the metaphors and reject the facts, that people are more likely to vote for what they perceive as their values than what we liberals "know" are their best self interests. Conservatives tend to follow a "strict father" metaphor, while progressives tend to follow a "nuturing parents" metaphor. If we don't learn to frame our message, we will continue to lose elections and the public.
+5 # Mark McLeod 2010-12-18 00:51
Reich is right! But we should emulate Reich, not as an attacker of Obama, but as an influential voice who is giving Obama the cover to be more progressive in his public policy positions in the future.
-20 # Donald L. Fahrney 2010-12-18 02:13
All you so called experts are insane. You show me one proof that giving a desperate family 1200 dollars which doesn't cover adequate food or rent will stimulate the economy. That is totally insane, people who have jobs and income over and above the essentials and who buy things stimulate the economy not people in survival mode.
+7 # CTPatriot 2010-12-18 18:48
Just what exactly do you think that the desperate family is going to do with that $1200 other than spend it on food, housing and clothes - the necessities of life - and $1200 that wouldn't have been spent by that family for consumables if they didn't have it.

That's what stimulates the economy - buying stuff so that people who sell it and produce it can make money and keep their jobs. We still need to do other things to create new jobs and new demand, so unemployment help alone is certainly not enough.
+3 # rf 2010-12-19 09:30
It doesn't work anymore because they buy stuff from China and the huge profits go straight to rich butt holes in Brookline and 5th ave. I don't know what is going to change this but I CAN tell you it won't be pleasant!
+11 # Donald L. Fahrney 2010-12-18 02:15
Geez, a tax break of maybe a thousand a year will cause everyone to buy like crazy. Where does this nonsense come from
-4 # Merschrod 2010-12-18 13:37
Don, that $1,000 is the average - most will be much less. BUT, we are talking charity to the poor at that end of the income scale. Think "charity"
+7 # Jeff R 2010-12-18 22:24
Com'on Fahrney Did you flunk out of grade school? Use your loaf!!!
There were 308 million people in the US in 2010. About 50% of them, 154 million people, live paycheck to paycheck and are forced by their situation to spend every dime of income they receive. There are 3.14 people in the average family, so there are about 49 million families in this country in that 50% (the ones that must spend every dime of all the income they receive). If, on average, those families get a $1,000 tax break they will spend it all and give the economy an immediate $49 BILLION boost. Taking the spending multiplier (7X to 8X) into account we can expect the total boost to the economy to be between $343 - $392 BILLION. And THAT is not nonsense. The same $49 billion given in tax cuts to the top 2% of income earners will AT BEST boost the economy by about $70 billion. And this analysis completely ignores the 48% of the population between these two groups who will spend something. Set "conservative" economic mythology aside and look at the FACTS and what should be done will be obvious. This information is not hidden. It is available to anyone who will look. So turn off Faux Neuz and look!!!
+27 # ER444 2010-12-18 03:07
"That Democrats have allowed themselves to get into this fix is a testament to either their timidity, obtuseness, or dependence on the campaign contributions of those at the top. " Come on Mr. Reich. Say it like it is. The Democrats with a super majority acted like a jar of spineless worms AND Mr. Obama's insistence on bipartinship and compromise made the problem worse. They have completely failed to fulfill the mandate that the voters in 2008 clearly gave them. The readers here are probably tired of reading this comment from me, but I must write it again. I wish Mr. Sanders, Mr. Grayson, Mr. Feingold AND Michael Moore would start a third party and bring some honesty to politics in Washington. IT IS TIME FOR A THIRD PARTY !!!
+8 # DaveW. 2010-12-18 14:38
ER444, I agree its time for a third party and with most of your comments. But we all must realize something. DEMOCRATS, especially in the Senate, NEVER had a SUPER MAJORITY. Nelson, Conrad, Landrieu, Baucas, Bayh (whom am I forgetting?) were never DEMOCRATS in the first place. Nelson voted with GOP over 90% of the time. That's a DEMOCRAT?! That's a "Super majority?" Obama is spineless worm or simply a Republican working undercover. I decide.
+8 # free transit 2010-12-18 03:26
The argument against supply-side is simple. A business grows because it has orders, not money.
Bigger than any tax is energy prices. Even heavily subsidized, energy still an economic drag. The first job is to stop the energy leak. End the auto and its sprawl.
+12 # ceann 2010-12-18 05:28
Obama was our hope. He has deserted us. I have never felt more helpless and hopeless for our country. I sure wish that I had backed Hilary. She would not have caved to the republicans. She is a fighter. All Obama knows how to do is to submit. Belly up. He is a true Omega.
+6 # CTPatriot 2010-12-18 18:53
Hillary may be more of a fighter but if you think things would have been any different with her as president you're nuts. She's every bit the corporatist and triangulator that Obama is. She learned from the best.

Unfortunately, our elections have come down to corporate sponsored beauty contests. I had thought Obama might be different. but I realize now that he and Hillary were both selected and approved by the corporatists and neither would have gotten as far had they not been.
+1 # Alan D. Kardoff 2010-12-19 02:08
A third party won't work. Sounds good.
Too much money to block it.

Another commentor suggested all the money would reach low/middle income families immediately. NOPE. Over the course of the work year. Those on UE don't get the bonus either. AFter 13 mos they will be in another pickle, still owing tons of money.
0 # Alan D. Kardoff 2010-12-19 02:15
I backed Hilary. Obama with his NE cohorts including H. Dean, Sen. Kennedy, Leahy and many other pseudo-sophisticates
blocked Hilary from having a chance by denying her the votes from MI & FL.

I cannot vote for Obama in 2012.

I pray we can get enough support for her to send Obama to a place where he is most suited: The Court. Maybe Bill will like the new publicity with Obama enough to convince Hilary to get back into their former home. This time many Obama
backers will realize she is the light.
+5 # rf 2010-12-19 09:33
Billary were just as bad as fact they gutted the regulations that caused the banking crisis...probab ly because he was supported largely by Wall St. banks!
+6 # Rick Nagin 2010-12-18 07:19
I don't agree with Reich. He says the choice was either this package or allow taxes to rise on middle incomes. That was part of it, but the real threat was the cut off of unemployment benefits to millions of vulnerable people -- about six million by the end of 2011. That's why this bill was reluctantly supported by Hilda Solis, Sherrod Brown and Dennis Kucinich. As Brown said it was "legislative extortion." That's why Rich Trumka, after initially opposing the bill, called its passage "a huge relief" bought at a terrible price. Anyone with an ounce of humanity has to support this bill, which reflects the unfortunate balance of power in Congress even now before the new and much worse Congress takes office.
+8 # Merschrod 2010-12-18 13:40
Why wasn;t "vote id down" and then start anew a stragegy and let the Repugs take the hit?

It was not all or nothing, but require gumption to try again - gumption seems to be in short supply!
+14 # John McAlpin 2010-12-18 07:25
Well, those of you who are too young to have known the Great Depression have something new to look forward to: the coming Neodepression. It will have many of the ingredienrts of the old one, but I believe it will be harder on more that the one before since there are so few of us on a farm now.
+13 # Barry De Jasu 2010-12-18 07:44
Whatever the true reason for Democrats and President Obama's acceding to the wishes of the right and corporations, one thing is quite true. The President and his enablers are the true Compromisers. There seems to be very little Principle that they will not compromise.
+5 # tomo 2010-12-18 22:42
True, Barry. The man who will keep Bradley Manning in solitary confinement is a man who has no principles.
+8 # Tim Nissen 2010-12-18 08:08
There is one blindly obvious reason that we have just granted tax relief to the rich, which is the ignorance and stupidity of the electorate. This ignorance and stupidity has frequently been mirrored on the left, by those who act as thought they cannot count to one hundred, and do not understand the mechanisms of representative government.
None of what Mr. Reich says in this opinion piece is news. It merely states what anyone who has been paying attention has known for the better part of a year. What it doesn't state, correctly, is where the blame belongs. Like so many of us, Mr. Reich appears to be more interested in indignation, than in identifying the real problem, part of which is the failure of the left to understand the problems facing our best leaders, and to maintain solidarity with them in the midst of their troubles.
+4 # Merschrod 2010-12-18 13:42
We are in deep do do if these are our best leaders. We might as well forget the whole mess and retreat to the commune
+3 # tomo 2010-12-18 22:46
You speak in jest, Merschrod. But I do think it really would be good to invest more interest and energy in the local scene. Try, with the cooperation of your neighbors, to build a community that can provide some shelter in the storms that seem to be gathering.
+19 # Realist 2010-12-18 08:29
Ever since the Supreme Court took it upon themselves to "settle" the Election of 2000, the people of this nation sought to correct that blatant act of judicial activism.

First, Sen. Jim Jeffords switched parties, and the Democrats threw away the power by not using it. he people got serious in 2006 and gave control of the Congress to the Democrats, who proceeded to claim that they didn't have enough power to do anything - a situation the voters corrected in 2008 with the White House and the Congress being placed firmly in Democratic hands. And yet again, the faithless Democrats threw the power away, claiming that the Republicans were far too strong.

There is too much of a pattern here to believe any longer that this is purely coincidental. Under the New World Order, the Democratic Clown Posse is only intended to provide bipartisan cover for the function of a one-party corporatist state. Only one party is to rule, and that party is not the Democrats.
+12 # Annette Smith 2010-12-18 08:31
The Republicans are bound and determined to take us back to the 18th Century or further. And they obviously have the people fooled because they are getting elected!
0 # MyKisa 2010-12-18 08:45
like raygun, Prezbo is overseeing nice fat contracts for GE, for engines the military does not want or need....yeah I`m down with it....
+11 # dfvboulder 2010-12-18 09:21
I love Reich, but I wish he and other economists would spell it out more directly: it is not just morally wrong for 1% of the people to get -- and keep -- 25% of the income; it just plain doesn't work. That 1% doesn't do 25% of the spending. Maybe it does 10%. That leaves people with 75% of the income to prop up the other 90% of the spending. But they won't, especially not now. It was the debt they took on that enabled the game to go on as long as it has. So when the economy drops down about 15%, we can start a new game. It just won't be quite the joy ride it once was.
+1 # Nancy Hurley 2010-12-18 20:04
Quoting dfvboulder:
That 1% doesn't do 25% of the spending. Maybe it does 10%. That leaves people with 75% of the income to prop up the other 90% of the spending. But they won't, especially not now.

Not just "won't', but can't!
+7 # Stemoo 2010-12-18 10:08
Reich is right on target. Without serious campaign funding reform, probably in the form of publicly financed elections like many other democracies, the rich will continue to buy elections and subjugate the middle, working and poor classes to an ever diminishing piece of the American dream.
The "New Depression" will be sold as "the way things should be with time-tested values." i.e. the aristocrats are back and are forming, rapidly, the ruling class.
+17 # Lisa M 2010-12-18 10:25
Almost never in the MSN do you hear historical tax rates discussed to put this all in context. The highest marginal rate has been historically much higher than it is now, 90+ % during Eisenhower's term.

It's all madness - like Obama freezing the pay of federal employees - a hardship on them and a drop in the bucket.

Get the highest marginal rate back up to at least 50%, quit dribbling away trillions in counter productive wars, pump the extra money into massive public works projects targeted to rebuilding our infrastructures and there we go.

It's not going to happen anytime soon though because the public in general has been sold a bill of goods and not nearly enough people get that. Too many have been manipulated by bogus social issues and boo! - a lot of old fashioned fear. Be afraid, very afraid. this point, I'm wondering how we get there under the current two party system. I don't at this juncture see a road there through the current Washington cesspool.
+8 # j. Morgan 2010-12-18 11:14
The public must finance the elections and a third party of the people must form in order to bring representation to the American citizen. The existing situation is that of rich lawyers cutting deals for their Corporatist benefactors.
+3 # phrixus 2010-12-18 11:44
100% accurate. Doable? "Therein lies the rub."
+9 # Rita Walpole Ague 2010-12-18 12:03
"...the economy will eventually go over a cliff." But, oh no, not the fortunes/power of our villinaire rulers.

I and my good friend and next door neighbor, like me, a politically moxie and intuitive Irish American woman, threw an Irish wake for democracy party the evening Reagan was elected.

Now, in today's U.S. of (greed and power) A.(ddiction), we are both once again in mourning, and hating the thought of what a dreadful mess we're handing onto our children, grandchildren, and generations to come.

The slow but sure coming of the villianaire's coup de etat, flagged by a Pres. nicknamed Ike as he left office, came into full bloom during the Bushwhacked years, and now is going to take never before dreamed of steps to undo. But, UNDO THE COUP we must.

One of the great prophet/leaders of our time, Michael Moore, took such a step recently when he and other good souls helped bail out St. Assange. Let's HOPE Michael can create another one of his great films, this one showing a nation dying of thirst for justice and truth, the kind of truth seen in Wikileaks. And yes, Robert Reich, your truth too.
+5 # Phil Meyer 2010-12-18 12:10
I remember the 1950s when income disparity was low and a family could be middle class with just one wage earner. Now it takes two. Could it be that the Regean-initiate d squeeze on the middle class is what really powered the women's movement? And its main benefit is going to the most wealthy? Where is Gloria Steinem now that we need her?
-8 # forparity 2010-12-18 12:34
"Nor did George W. Bush's tax cuts trickle down. Between 2002 and 2007 the median wage actually dropped. And Bush's record of job creation was pathetic relative to Bill Clinton's, when taxes were higher. Under Clinton, America added 22 million net new jobs. Under Bush, barely 8 million."

However, one - in the spirit of Obama talking points - must wonder how many millions of jobs those tax cuts saved? (or might have created if the US had not lost it's entire economic base in the two decades preceding Bush?

We do know that following the full implementaion of the Bush tax cuts, in 2003, that federal tax revenue rose a record 44% from 2004-2007 (till the economy crashed again).

Of course, what I say is true - the trick for partisan spewers is to break thru the noise and to actually talk about how to create an actual economy - a broad economy?
-6 # forparity 2010-12-18 13:36
"the richest 1% of Americans is now taking home a larger % of the nation's income than at any time since 1928.."

This milestone happened in 2000, Mr. Reich.

The data - this theme of this story of "the first time since 1928," was 1st printed in the NY's, by David Kay Johnston: "Richest are leaving even the rich far behind."

Problem here is that Johnston's report was about his analysis, data up to the year 2000.

It was about the great surge of income amongst the wealthy during mostly the 1990's - the Clinton bubble era.

The facts. As a % of total income, the top 1% of income earners soared from 14% in 1993 to 21% in 2000.

Enter Bush-yes, after yrs trying to get the economy going again after inheriting the Clinton crash, the income of the top wealthy fell, then by 2007 it was up to 23%.

Is it still climbing under Obama? Or did the crash takes it's toll, as after the 2000 crash?

The big leap was under Clinton-not Bush. Same for CEO pay.

David also shared this with me, in 2007:

"* Clinton gave the richest of the rich a tax cut worth 67% more than all of the Bush cuts combined"
+3 # Activista 2010-12-18 14:29
This milestone happened in 2000?
In 2007, the share of after-tax income going to the top 1 percent hit its highest level (17.1 percent) since 1979, while the share going to the middle one-fifth of Americans shrank to its lowest level during this period (14.1 percent).
Between 1979 and 2007, average after-tax incomes for the top 1 percent rose by 281 percent after adjusting for inflation — an increase in income of $973,100 per household — compared to increases of 25 percent ($11,200 per household) for the middle fifth of households and 16 percent ($2,400 per household) for the bottom fifth (see Figure 1).
If all groups’ after-tax incomes had grown at the same percentage rate over ..In 2007, the average household in the top 1 percent had an income of $1.3 million, up $88,800 just from the prior year; this $88,800 gain is well above the total 2007 income of the average middle-income household ($55,300). [1]

BTW - Clinton is pawn of rich and AIPAC -
+1 # forparity 2010-12-18 15:57
Yes, Activista, that milestone (since 1928) happened in 2000.

Johnston, Reich, Krugman, Prante - everyone's looking at the same data. And I did note that after falling back from the 2000 milestone, that it finally got higher, in 2007.

So-look at your graph once again - there it is; from the mid 80's (the recovery from the Carter collapse was done) to around 1994-this stat is dropping. From 1994 to 2000- it's a friggin rocket. Then it sinks again, following the collapse of the 90's Enron bubble, and finally by around 2006 it's back up to the "milestone" of 2000.

I'm not defending the view that this is outrageous-simp ly pointing out that Reich, as well as the entire national media, has sought to misrepresent when it happened.

You'll also note that other then Reagan's recovery period-it did not go up until Clinton's bubble econ.

See, you can harp on the 1979-2007 number all you want - but the big majority of this shift in fortunes occurred from 1993 to 2000; not before - not after.

BTW - What we seem to have heard all along here was something like, "if we could only have the Clinton years again"

Search me.
-5 # forparity 2010-12-18 15:15
OK - here for all of those here, when faced with information that challenges what they need to believe - for their personal agendas, here's another shocking obvious truth:

It's indeed interesting to note just when this great disparity of wealth actually took off - thru the roof.

CEO pay compared to average worker pay?

I suspect that nobody wants to remember it that way, either.

CEO pay (compared to average worker pay) soared under Clinton - fell back under Bush.

See - now you can check the "thumbs down" to express how comfortable you are with keeping the American people ignorant.
+3 # Activista 2010-12-18 18:51
CEO pay compared to average worker pay - 2009?
Bank of America Corp.
Thomas Montag
2009 Total Compensation: $29,930,431

Citigroup Inc.
John Havens
2009 Total Compensation: $11,276,454

The Goldman Sachs Group Inc.
Lloyd Blankfein
2009 Total Compensation: $9,862,657

JPMorgan Chase & Co.
James Dimon
2009 Total Compensation: $9,274,494

Morgan Stanley
Walid Chammah
2009 Total Compensation: $10,021,969

Wells Fargo
John Stumpf
2009 Total Compensation: $21,340,547

Executive pay has taken center stage since the $700 billion government bailout of financial institutions. Americans expressed outrage as big banks helped create the financial crisis, took billions in taxpayer bailouts, paid out billions in pay and bonuses and are now lobbying on financial regulatory reform.

forparity - do you believe that the tax cut gave these banksters iniciative to employ more people? Or give better/more loans to SBS? More like lobby for less regulations = MAXIMIZE PROFIT - screw USA
0 # forparity 2010-12-18 19:25
What does that havea to do with my comment?
0 # Activista 2010-12-18 21:44
Who is average CEO? Almost meaningless term. Above are examples of few who are screwing US.
Reagan growth was based on deficit spending - it doubled compared to Carter. And the executives $$ income doubled - consumer goods went to Japaniese - TVs etc. - we were military spending on tanks - this cancer is with US and killing US.
Clinton in 2000 - corporate earnings maxed - there was at least some correlation to CEO earnings. High Tech bubble - any idiot could see that - except Greenspan and WallStreet.
The same housing bubble in 2008 - Japan went through it 20 years ago.
What does that have to do with my comment? Reagan started this trend ... Reich is reight.
0 # forparity 2010-12-19 15:49
Of the lot Clinton has caused the most damage, in my opinion. Reagan inherited a horrible mess -- and via deficit spending (like Obama is doing, and as Bush tried) he turned around - with the poor (especially minorities) really benefiting. Clinton, on the other hand gave us the Enron bubble (all it gave it took away with it crashed in march of 2000) and he gave us the deregulation and he gave us the housing bubble.
It's a cyring shame that Bush didn't see thru the shallowness of the housing bubble economy- and stop it in it's tracks.

Note: Every time (which is almost daily - from the press and all Obama's people) you hear that Clinton left Bush a $5.6 Trillion surplus, and Bush turned it into deficits (according to Peolosi and Fareed Zakaria, by the spring of 2002-- wow)... think "what a pack of lies." Didn't matter who was Pres., Bush or Gore, 80+ % of the shift to major deficits (by 2003) was because of the economy which Clinton left Bush, with a little added loss by the effects of 9/11.

From 2004 forward - I look more towards Bush for not addressing it. But neither is Obama, you see.. just getting worse. Think.
+4 # swaneagle harijan 2010-12-18 14:00
Interesting that the self described "Father of Reaganomics", Paul Craig Roberts, is a current darling of Counter Punch among other "progressive" online publications, that give voice to this guy. He still claims this title with great pride. His defenders claim they like what he writes now, but do so without fully investigating his virulent anti migrant position nor his ties with the extreme racist right.
+4 # Steve Weinstein 2010-12-18 14:09
We can go on endlessly decrying all the "real" causes and effects of our dilemma.
I'm tired of being right, aren't you?
Does anyone in this string have viable ideas for folks like "us" to act on?
+5 # amy01 2010-12-18 14:13
The rich don't deserve any tax breaks as they are already rich enough! Obama is once again caving to not only to the Reps, but the rich! When will he learn its the economy stupid! The middle and working class need the tax breaks just pay off their debt created by the rich criminals bankers, financiers, etc.! The tax increases from the rich are needed to pay for the jobs, roads, bridges etc., and in California the Bullet train to transport the 40 million residents here to jobs and families!
-5 # forparity 2010-12-18 16:28
I love to see you get 40 million residents on this one proposed bullet train.

You do know that the economics of this will never work out - not even at $800 per person for each one-way trip. What is possible, perhaps in the flat lands of Texas (and with their more functional government and wonderful infrastructure) is not even a pipe dream here in CA.

Here, they'll have to elevate the whole damn thing several feet because of the hype over rising sea levels.

Oh, how's that looking here in Los Angeles?

Right - moving right a long at a 3 1/4 inch clip every 100 years - except for the past 30 odd years, when sea level has not risen - any. But the state is spending $tens of millions of dollars trying to scare us all over it.
+1 # Activista 2010-12-18 18:57
"You do know that the economics of this will never work out"
If we add
to each car trip per gallon since 2001 - true cost of our transpontation - plus cost of car plus infrastructure - bullet train could make economic sense
-1 # forparity 2010-12-18 22:56
NO - it will simply add more to the debt. $hundreds of billions + $hundreds of billions ='s more hundred of billions.
0 # Susan T 2010-12-19 11:50
forparity 2010-12-18 14:28
"I love to see you get 40 million residents on this one proposed bullet train".

Not to overstate the obvious, but the plan is to have more than one solitary train running on the tracks and more than one line.

"Japan hopes it will win a contract to help California with its plan to build a high-speed rail system by 2030 expected to carry 90 million passengers a year, centred around a Los Angeles-San Francisco line".
0 # forparity 2010-12-19 12:44
Susan.. really? They can put more than one train on hundreds of miles of track? Wow!

Susan, the entire population of California (2009) is 36,961,664, just for your information - and on the weekend that they all decide to flip places between Los Angeles, and San Francisco - I'm staying home.
0 # PlatonicCaveMan 2010-12-18 17:25
Charles Dickens couldn't've said it better himself.

But does Dr. Reich have his own printing press, or his own printing fiat currency mint?
0 # Activista 2010-12-18 19:07
Average CEO to average employee ratio? I am also CEO but there is James Skinner, CEO of McDonald’s:

In 2009, James Skinner, CEO of McDonald’s, received total compensation of $17.6 million. This included salary of $1.4 million, an annual bonus of $3.3 million, a long-term cash award of $8.3 million, stock awards of $1.7 million, stock options of $2.2 million, and benefits and perquisites of $0.7 million. Skinner’s employment contract also included a change-in-contr ol provision under which he would receive three times his base salary and bonus if McDonalds was sold to another company. The change-in-contr ol provision was valued at $19.9 million in 2009. Executive compensation levels have been criticised in recent years, giving rise to shareholder activism.

Divide 17 600 000/30 000 = almost 600 x average employee? And I bet that Skinner's "benefits" are bit better also.

Only in banana republic of USA -
+7 # Ron Whiteman 2010-12-18 19:41
By caving to the GOP, President Obama has set the stage for the takeover of both the Presidency and the House and Senate by the GOP in 2012. His lack of spine on this and several other issues allows the GOP to claim victory if the economy is rescued by saying they were responsible for "forcing" the President to listen to them. In addition, they will be able to blame him and the Dems for the additional nearly trillion dollars in debt that will be incurred as a result of the tax bill. When Dubya supposedly gave us a tax cut back in '91, I don't really recall getting more than a couple of dollars on my $40K salary, so I'm not really expecting much from this one. The only people who will really see savings will be the rich, who will not allow one red cent to "trickle" down to the rest of us. There will be few, if any, jobs created, and those that will be created will be for minimum wage. When are people going to realize that there ain't no such thing as a free lunch. If you expect something for free, then you must be a Republican politician or one of their lobbyist cronies. Robert Reich is totally right!!!
+3 # tomo 2010-12-18 23:02
Reich is right. The electorate has by and large bought into the courtship of the richest among us. The man in the street--not Wall Street--thinks: "I'm having a hard time making ends meet as it is; if taxes went up, I'd have an even harder time." Truth: every time the taxes on the rich have gone down, the man in the street has had a harder time. The rich are where the money is. If they are not taxed generously, there is very little revenue for streets, firemen, schools, emergency rooms. All these are suffering now--and the need to support them increasing falls on the man-in-the-stre et. In the meantime, the rich foster unendable wars--which the man-in-the-stre et also funds--and to which he sends his sons and daughters.
0 # jagan 2010-12-20 10:22
Dr. Reich
You supported this useless lazy so called democrat,so please donot complain.
I supported Hillary, check my contributions to her, you Keith, Rachel and all of you called Hillary all sort of ugly names, now donot complain
0 # mdvoter 2010-12-21 14:00
The more you look at all this the more the answer is crushingly obvious:

Otherwise you continue to accept that the IRS is the answer - pitting American v American at every level.

The approach gets politicians and lobbyists out of citizens lives.

Today the biggest threat to citizens livelihood and family is not Al Qaedah - but the IRS - it can ruin your life at every level with its illegal procedures and practices. It's employees have created an entity to itself entirely beyond the reach of the constitution and due legal process - that works to serve their own self-sustaining bureaucracy first - politicians second and American citizens third.

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