The rich get richer, the poor get poorer, and — surprise! — there’s corruption in Washington.
In the aftershock of the financial earthquake caused by the failed conservative fiscal policy under President George W. Bush, the Republicans in Congress are resolute in continuing to enrich the wealthy at the expense of everyone else.
U.S. Census data revealed, immediately before the 2010 Congressional elections, that there is a record gap between the rich and the poor.
This was caused by Republican philosophies of minimal taxation for the rich and a free market economy.
In a free market economy based solely on competition, you do not pass go, you do not collect $200. You lose the game, and the rich win.
Prior to a tax deal with the Republicans, President Obama advocated for preserving income tax cuts for the bottom 95 percent. He wanted to eliminate the tax breaks for the wealthiest. Tax the rich and you close the gap.
Instead, the Republicans are determined to extend these tax cuts permanently. This is in line with their determination to stop the government from assisting those in need. They refuse to create a society of equality.
Republicans got their way in a deal with President Obama to extend tax cuts for two years. This allowance was in exchange for an extension of unemployment benefits, a mini stimulus and bipartisan tax breaks.
The whole concept behind this deal underlines the Republican objectives to enhance the power of the rich. Stubborn indeed, they opposed the extension of unemployment benefits as further evidence that they won’t support those in need.
It’s not necessarily about punishing the rich. It’s about having them pay their fair share and contribute to society in an equal way. It’s about having financial equality and opportunities for everyone.
Financial equity also participates in fueling the economy.
“If the primary goal is stimulating the economy, tax breaks to the rich are simply not cost-effective,” wrote Richard H. Thaler, a professor of economics and behavioral science at the Booth School of Business at the University of Chicago, in an opinion piece in The New York Times. “Numerous studies have shown that the poor spend nearly all of their income, while the rich save a significant amount of theirs.”
When President Bush came into office, he distorted the tax cuts he put into place.
“(Bush was) determined to overstate the surplus and understate the size of the tax cuts: hiding the true budgetary effects of the tax cuts would minimize the danger of the fiscal tradeoffs becoming salient,” said Jacob S. Hacker and Paul Pierson in an American Political Science Journal article.
The Bush administration, by enacting these tax cuts, put in place fiscal tradeoffs that prevented economic growth and reduced government resources.
The effects of the Economic Growth and Tax Relief Reconciliation Act of 2001 were, in fact, the opposite of what the title proclaimed.
The immense concentration of income at the very top robbed the middle class of spending power and the ability to power the economy.
Richard Reich, a professor of public policy at the University of California, Berkeley, and the former secretary of labor under President Clinton, pointed out in an NPR interview that there were two years in which income was so heavily concentrated at the top.
“One year was 2007,” said Reich. “The other year was 1928.”
Both years were the start of two major market failures, which were caused by too few economic actors having too much influence in the market.
“Unless we understand the relationship between the extraordinary concentration of income and wealth we have in this country and the failure of the economy to rebound, we are going to be destined for many, many years of high unemployment, (and) anemic job recoveries,” said Reich.
The tax cuts call for immediate attention. This is an issue for the next election. Obama has saved this controversy for his reelection campaign, and this will be a major factor. Raise taxes on the rich, close the gap, generate revenue.
Bring it on, 2012.