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THIS GRAPH DOES SAY IT ALL! The 1% has chipped away at any semblance of economic fairness in our country by buying our government, lock-stock-and-barrel. Campaign donations get the upper-class exactly what they want: the repeal of regulations that kept our economy not only fair, but humming along in a healthy way for more than half a century, and a tax code that gives them all the benefits in our society, at the expense of the 99%.

And, the ideas that the GOP continues to promise to implement if elected, are … drum-roll please: DEREGULATION AND LOWER TAXES FOR THE ALREADY WEALTHY!

Historic evidence confirms what Progressives have always believed: Trickle-Down economic theory does not work. Yet, the GOP continues to base their plan for economic recovery on this discredited idea. We’ve addressed this issue multiple times in our blog, and in reviewing these articles we chose Broken Compact for a link to this post for readers who might like more on the subject. There are others, such as Voo Doo Economics, that you can find by using our search box to the right and looking under the term Trickle-Down.

It all began when the Reagan administration instituted trickle-down economic theory by drastically cutting taxes on the wealthy, in the mistaken belief that the elite upper-class would create jobs (and therefore boost the economy) in exchange for having their taxes cut. And since that time our nation has been mired in a failed economic experiment.

These drastic Reagan tax cuts (from a top marginal tax rate of 50% down to 28%) began the country’s slide into a banana-republic style of income disparity and dangerous levels of national debt. Our tax payers gave our nation’s money to the already wealthy, and the elites shipped our jobs out of the country. The rich got richer, causing our country to be starved of the funds we needed to invest in a bright future. We paid dearly for this trickle-down fiasco: we paid with our jobs, our infrastructure, our educational system, our future.

The nation’s richest 1% now takes for themselves 24% — one-quarter —of the nation’s income, way up from where it was in the 1970s when they took around 9%. Then, our infrastructure, educational system, national employment, and our future all looked bright.

The GOP clings tightly to this discredited economic theory, in spite of the historical evidence to the contrary. The main tenet of their plan to save the economy continues to be the same as it was in 1980: “lower the top marginal income tax rate” along with “eliminate capital gains tax” for the investor class (i.e. the already wealthy). Cutting taxes for the rich has been, for decades now, the GOP’s main response to any economic challenge … it’s the same old tired idea.

It’s clearly an exercise in “Magical Thinking” to believe that cutting taxes to benefit the wealthy class will create abundance for the rest of us! The main problem the GOP has with the tired repetition of this same old saw is that history does prove them wrong. Just because the GOP asserts that trickle-down works does not make it so.

Over the past sixty years the top marginal tax rate has been as high as 92% and as low as 28%. Checking the historical data should show us whether the economy and jobs grow during low marginal tax rates and if higher marginal tax rates produce a weak economy — as the GOP claims.

The facts demonstrate that economic growth was fastest in the 1950s when the top marginal tax rate was above 90% — an annual growth rate more than 4%. AND over the past 8 years, with the top tax rate at only 35%, the economic growth was anemic — less than 2%.

Over the decades the growth in the economy averaged 3.7% in the years that tax rates were at or above 50%. Conversely, growth in the years with a tax rate less than 50% averaged only 2.7% annually.

These figures absolutely discredit the trickle-down economic theory.

The President has challenged the media to ask the Republican leaders, “If you don’t like the President’s plan for a jobs-recovery, then what is YOUR plan?” If the GOP will only submit their plan in writing to address the immediate jobs crisis, as the President has done, then the same independent economists that scored the President’s jobs-recovery plan can score the GOP plan and we can have some real data to compare. Do you think there must be a reason that they don’t reveal their plan?

TRICKLE-DOWN … SIMPLY DOESN’T!

This is a great chart by the Organization for Economic Co-operation and Development (OECD) that compares the income inequality and disparity from country to country. You can easily see that the US ranks very high in disparity, with only Portugal, Turkey and Mexico having higher rates of income inequality.

We’ve become a banana republic!

Has There Been a Change in America’s Distribution of Income in Recent Decades?

Between 1979 and 2007 average US household income — adjusted for inflation — grew by 62%. But that growth was unequally distributed across the population. Income for families at the upper end of the income scale rose much more rapidly than income for households in the middle and at the lower end of the scale.

The CBO prepared a study at the request of the Chairman and former Ranking Member of the Senate Committee on Finance that examines the trends in the distribution of household income between 1979 and 2007.

The results of the study are clear: After-Tax Income from 1979 to 2007 Grew More for the Highest-Income Households.

•For the 1% of the population with the highest income, average real after-tax household income grew by 275% (see chart).
•For others in the 20% of the population with the highest income, average real after-tax household income grew by 65%.
•For the 60% of the population in the middle of the income scale, the growth in average real after-tax household income was just under 40%.
•For the 20% of the population with the lowest income, the growth in average real after-tax household income was about 18%.

THE UPPER 1% SAW THEIR INCOME GROW AT THE RATE OF 275%; WHILE THE LOWER 20% SAW INCOME GROWTH AT THE RATE OF 18%.

The GOP coined the phrase “Class Warfare” to claim that even questioning cutting taxes for the wealthy was an attack on the “successful” and as such is a declaration of “war” on the upper class. But the numbers don’t lie — the REAL “Class Warfare” that has been waged over recent decades is the one that is being waged BY the upper class ON the rest of us … the 99%!

CLN has been blogging about Income Inequality in America since June 15, 2010. You can research these articles by entering the term Income Inequality in the search bar.

Check out this great graph which shows clearly that the union busting culture of the last 50 years in America has contributed to an ever larger income inequality for the nation. This slow degradation of our middle class has done more than just decimate a wide swath of our population — it has severely impacted our ability to grow our economy. And this fact has hurt our people and our future.

Taking to the streets and ‘getting in the way of power’ has moved our nation forward at many critical moments in our history — mobilized groups of citizens coming together in a struggle to improve society and promote justice are important themes in America’s history.

The social movements for abolition and women’s suffrage, civil rights and the minimum wage, the campaigns for clean air and water, equal pay for equal work, the eight-hour workday, an end to discrimination, the right to choice, peace, consumer safety and unemployment insurance — all are major stepping stones in the story of America.

This is what America is all about: social movements driving cultural and political change. Some would have you believe that America is about ‘law and order’ — that following the rules is most truly America. But, in actuality, America was born of a social movement that brought people together who wanted freedom from England — even seizing the property of a British corporation, The East India Company, and illegally destroying their tea by dumping it into the Boston Harbor to make their point. (It was enough tea to make 24 million cups of tea and was valued by the East India Company at 9,659 Pounds Sterling or, in today’s currency, just over $1 million!)

Today we may be witnessing another great social movement in the streets of many American cities. Occupy Wall Street has become Occupy Together in more than 1,400 cities and has even spread beyond our borders, across the globe to more than 900 cities outside of our country. These people are mobilized to protest growing income inequality and the recent financial meltdown, caused by financiers, that resulted in even more income disparity.

Conservative David Brooks writes in the NYT that “Americans are trying to re-establish the link between effort and reward. This was the link that was severed on Wall Street, where so many made so much for work that served no productive purpose. This was the link that was frayed by the bailouts, when people who broke the rules still got rewarded.”

“In sphere after sphere, strong majorities want to see a balance between what you produce and what you get. The bank bailouts worked and barely cost the government anything, but they are ferociously unpopular because the unjust got rewarded.”

And Jeffrey Sachs, Director of the Earth Institute, Columbia University and the author of The Price of Civilization explains, “The protestors are not envious of wealth, but sick of corporate lies, cheating, and unethical behavior. They are sick of corporate lobbying that led to the reckless deregulation of financial markets; they are sick of Wall Street and the Wall Street Journal asking for trillions of dollars of near-zero-interest loans and bailout money for the banks, but then fighting against unemployment insurance and health coverage for those drowning in the wake of the financial crisis; they are sick of absurdly low tax rates for hedge-fund managers.”

“Here, then, Wall Street and Big Oil, is what it comes down to. The protesters are no longer giving you a free ride, in which you can set the regulations, set your mega-pay, hide your money in tax havens, enjoy sweet tax rates at the hands of ever-willing politicians, and await your bailouts as needed. The days of lawlessness and greed are coming to an end. Just as the Gilded Age turned into the Progressive Era, just as the Roaring Twenties and its excesses turned into the New Deal, be sure that the era of mega-greed is going to turn into an era of renewed accountability, lawfulness, modest compensation, honest taxation, and government by the people rather than by the banks.”

And on a more practical note: Most economists agree that this inequality is more than just unfair, that it is actually dampening economic recovery. Because of a shrinking middle class and growing income disparity, there are less people with money to spend and therefore fewer and fewer buyers to provide ‘demand for products and services’ — which is the only thing that will lead to a growing economy.

Most important goals or accomplishments in the last 200 years have come about as a result of vast numbers of people coming together to protest wrongs they see and to demand change to promote their common ideas and ideals.

Americans have long used our constitutionally guaranteed freedom of speech and assembly to mobilize others to make the nation a better place. The lofty struggle to improve society and promote justice is one of the enduring themes in our nation’s history.

From the areas of economics, labor, government, politics, women, ethnic groups — to wars, the environment, current events, or global justice … it is impossible to understand the 19th and 20th centuries without understanding the role of social movements in the United States.

Thank ‘gawd ‘for the American spirit and our people who are willing to endure … but only up to a point: and then WE TAKE TO THE STREETS!

Federal regulations are strangling our economy … NOT!

John McCain claims that Federal regulations are causing the loss of billions and billions of jobs — in a country with a population of just over 300 million! Hmmmm?

How ever over-zealous McCain is in his rhetoric, the GOP claim that “over regulation” has cost jobs has already been thoroughly debunked. The AP recently did a fact check and reveals that Labor Department data shows that under Obama, only two-tenths of 1 percent of layoffs have been due to government regulation. Additionally, McClatchy recently polled small businesses across the nation and found little evidence that it’s a factor.

And to put the cherry on top: a major policy adviser in the administrations of Reagan and Daddy Bush, Bruce Bartlett, says that the claims about regulatory uncertainty “is a canard invented by Republicans” and “not a serious effort to deal with high unemployment.”

Bartlett states that the GOP focus on “government regulations” is an attempt to distract from their lack of any ideas to boost job creation.

When Social Security was first created it was thought of as “Worker’s Insurance.” It was set up as a fund all workers paid into, and that insured that if the family’s bread winner was no longer able to provide for the family — either through incapacitation, death or old-age — that there would be income for that family which would replace the money that could no longer be provided by the breadwinner. Worker’s Insurance.

Social Security was voted into law by the U.S. Congress, and signed by President Franklin Delano Roosevelt in 1935.

A Ponzi Scheme, on the other hand, is a “con” that is named for a criminal, Charles Ponzi, who defrauded many people with his illegal pyramid scheme and went to prison for his efforts.

So, in one case we have a lawful program created by the Executive and Legislative branches of our democratic government to help keep citizens free from desperate poverty (and has been enormously successful on that score!) versus a criminal enterprise designed to defraud people.

The GOP hated Social Security from the very beginning and has been determined in its efforts to get rid of it over the decades. Because it turned out to be the most popular government program ever, the GOP lately has tried a different tactic to get rid of the program that they hate so much: They shifted their strategy in recent years to working tirelessly to convince America that “Social Security is going broke and that it certainly will not be there for the younger generations.”

Both assertions are wildly inaccurate, or in other words: LIES. Social Security is fully funded until 2037, and if no adjustments are made in the program it will actually pay 75 – 80% of benefits thereafter. Clearly NOT going broke, and clearly WILL pay benefits to the younger generations.

When Social Security was developed, 50 percent of seniors lived in poverty. Today, poverty among seniors is ten percent. Social Security has done exactly what it was designed to do!

Why would the GOP try alarming fear-mongering about this very popular program? Well, the effort to convince America that the program is in deep trouble is only the first step in the GOP plan to convince the people to privatize Social Security. The eventual goal is to give the payroll deductions to Wall Street to let the “private sector” invest our Worker’s Insurance in the stock market … how do you think THAT will work out for the American people?

There are quite a few Social Security “fixes” that would work beautifully to simply shore up this insurance program by making minor adjustments to the program. Retirement age could slowly be pushed a tad higher over the next 30 years; the payroll tax “cap” could be raised to include taxing some or all of income over $100,000 at the same rate as the first $100,000.

SOCIAL SECURITY: PONZI SCHEME OR WORKER’S INSURANCE? YOU DECIDE.

We flipped over MSNBC’s Chris Hayes clarifying explanation of exactly why the upper income earners contribute the most in income taxes. Check this out and you’ll understand that the wealthy pay more in taxes because they control most of the nation’s wealth! Welcome to “Inequalistan.”

If you will pay close attention to the GOP, you’ll begin to see that whatever accusations they hurl at the Dems, is EXACTLY what they themselves are guilty of!

They accuse the Dems of being “Elites” when in fact the Republican Party represents the wealthy class, and the Democratic Party represents the working people and those in need. It’s a bizarre twist and an odd “through the looking glass” sensation when the GOP hurls the “Elite” word at the Dems.

The GOP accuses the Dems of “Class Warfare” and of being “Redistributionists” of the nation’s wealth, when in fact they themselves have waged class warfare against the middle class and the poor for decades now. The Republican Party is responsible for redistributing the country’s wealth to the upper-class and for the greatest income disparity in our nation since the 1920’s Age of the Tycoons.

We recently read a right-wing rant that claims that the poor shouldn’t be allowed to vote (an idea they’re working mightly to enact) because the poor only vote for the party that will give them hand-outs.

Isn’t THAT rich?

I say, the real Elites shouldn’t be allowed to vote because they only vote for the party that will give them tax breaks!

Bizarro.