After the Republican Great Depression, FDR put this nation back to work, in part by raising taxes on income above $3 to $4 million a year (in today’s dollars) to 91 percent, and corporate taxes to over 50% of profits.

Every billion dollars (a half-week in Iraq) invested in infrastructure in America created 47,000 good-paying jobs as Americans built America.

Reagan promptly cut income taxes on the very rich from 70% down to 27%. Corporate tax rates were also cut so severely that they went from representing over 33% of total federal tax receipts in 1951 to less than 9% in 1983 (they’re still in that neighborhood, the lowest in the industrialized world). 

Regan to cover his tax cuts doubled the tax paid only by people earning less than $40,000/year (FICA), and then began borrowing from the huge surplus this new tax was accumulating in the Social Security Trust Fund.  Even with that, Reagan had to borrow more money in his 8 years than the sum total of all presidents from George Washington to Jimmy Carter combined.  Reagan’s tax cut greatly diminished expenditures on infrastructure (bridges, roads, hospital, colleges, etc.)

When Reagan dropped the top income tax rate from over 70% down to under 30%, all hell broke loose. With the legal and social restraint to unlimited selfishness removed, “the good of the nation” was replaced by “greed is good” as the primary paradigm.

From other articles by Thom Hartmann published at commondreams.org

Since Bush has been president:

• over 5 million people have slipped into poverty;
• nearly 7 million Americans have lost their health insurance;
• median household income has gone down by nearly $1,300;
• three million manufacturing jobs have been lost;
• three million American workers have lost their pensions;
• home foreclosures are now the highest on record;
• the personal savings rate is below zero - which hasn’t happened since the great depression;
• the real earnings of college graduates have gone down by about 5% in the last few years;
• entry level wages for male and female high school graduates have fallen by over 3%;
• wages and salaries are now at the lowest share of GDP since 1929.

Before Reagan years there were only about 1 million illegal aliens in our work force, when he left office 3 million, and today 12 million.  During that same period union membership has dropped from 25% to 7%.  Cheap labor increases corporate profits.   Before Reagan the enforcement of laws against hiring illegals served as a barrier to their entry. 

From a link provided by Thom Hartmann

http://www.cbpp.org/10-16-03tax.htm  Center for Budget and Policy Priorities

Projected deficit by the conservative Brookings Institute economists through 2013 is $.5 trillion (2003 projection).  In 2003 corporate tax revenues were 1.2% of the GDP, which is 7.4% of all federal tax receipts for 2003--the lowest level since 1983.  This 7.4% is a record low (the data goes back to 1934).  The share that corporate tax revenues comprise of total federal tax revenues also has collapsed, falling from an average of 28 percent of federal revenues in the 1950s and 21 percent in the 1960s to an average of about 10 percent since the 1980s. 

The effective corporate tax rate — that is, the percentage of corporate profits that is paid in federal corporate income taxes — has followed a similar pattern.  During the 1990s, corporations as a group paid an average of 25.3 percent of their profits in federal corporate income taxes, according to new Congressional Research Service estimates.  By contrast, they paid more than 49 percent in the 1950s, 38 percent in the 1960s, and 33 percent in the 1970s.  Such taxes peaked at 32% of federal tax receipts in 1952, but in 2003 they shrunk to just over 7%. 

Published on Monday, August 6, 2007 by CommonDreams.org

Roll Back the Reagan Tax Cuts

by Thom Hartmann

http://www.commondreams.org/archive/2007/08/06/3003/

After the Republican Great Depression, FDR put this nation back to work, in part by raising taxes on income above $3 to $4 million a year (in today’s dollars) to 91 percent, and corporate taxes to over 50% of profits. The revenue from those income taxes built dams, roads, bridges, sewers, water systems, schools, hospitals, train stations, railways, an interstate highway system, and airports. It educated a generation returning from World War II. It acted as a cap on the rare but occasional obsessively greedy person taking so much out of the economy that it impoverished the rest of us.

Through the 1950s, though, more and more loopholes for the rich were built into the tax code, so much so that JFK observed in his second debate with Richard Nixon that dropping the top tax rate to 70% but tightening up the loopholes would actually be a tax increase.

JFK pushed through that tax increase to take us back toward FDR/Truman/Eisenhower revenue levels, and we continued to build infrastructure in the US, and even put men on the moon. Health care and college were cheap and widely available. Working people could raise a family and have security in their old age. Every billion dollars (a half-week in Iraq) invested in infrastructure in America created 47,000 good-paying jobs as Americans built America.

But the rich fought back, and won big-time in 1980 when Reagan, until then the fringe “Voodoo economics” candidate who was heading into the election trailing far behind Jimmy Carter, was swept into the White House on a wave of public concern of the Iranians taking US hostages. Reagan promptly cut income taxes on the very rich from 70% down to 27%. Corporate tax rates were also cut so severely that they went from representing over 33% of total federal tax receipts in 1951 to less than 9% in 1983 (they’re still in that neighborhood, the lowest in the industrialized world).

The result was devastating. Our government was suddenly so badly awash in red ink that Reagan doubled the tax paid only by people earning less than $40,000/year (FICA), and then began borrowing from the huge surplus this new tax was accumulating in the Social Security Trust Fund. Even with that, Reagan had to borrow more money in his 8 years than the sum total of all presidents from George Washington to Jimmy Carter combined.

In addition to badly throwing the nation into debt, Reagan’s tax cut blew out the ceiling on the accumulation of wealth, leading to a new Gilded Age and the rise of a generation of super-wealthy that hadn’t been seen since the Robber Baron era of the 1890s or the Roaring 20s.

And, most tragically, Reagan’s tax cuts caused America to stop investing in infrastructure. As a nation, we’ve been coasting since the early 1980s, living on borrowed money while we burn through (in some cases literally) the hospitals, roads, bridges, steam tunnels, and other infrastructure we built in the Golden Age of the Middle Class between the 1940s and the 1980s.

We even stopped investing in the intellectual infrastructure of this nation: college education. A degree that a student in the 1970s could have paid for by working as a waitress at a Howard Johnson’s restaurant (what my wife did in the late 60s - I did so working as a near-minimum-wage DJ) now means incurring massive and life-altering debt for all but the very wealthy. Reagan, who as governor ended free tuition at the University of California, put into place the foundations for the explosion in college tuition we see today.

The Associated Press reported on August 4, 2007, that the president of Nike, Mark Parker, “raked in $3.6 million [in compensation] in ‘07.” That’s $13,846 per weekday, $69,230 a week. And yet it would still keep him just below the top 70% tax rate if this were the pre-Reagan era. We had a social consensus that somebody earning around $3 million a year was fine, but above that was really more than anybody needs to live in America.

In the worldview Americans held in the 1930-1980 era, Parker’s compensation was reasonable. But William McGuire (aka in the business press as “Dollar Bill“) taking over $1.6 billion - $1,600,000,000.00 - from the nation’s second largest health insurance company (you wonder where your health care dollars are going?) would have been considered excessive before the “Reagan Revolution.”

There is much discussion of what the floor on earnings should be - the minimum wage - but none about the ceiling. That’s largely because effectively there is no ceiling, and those who control vast wealth in America are happy to have Americans fight over “How poor is too poor?” just so long as nobody asks “How rich is too rich?”

When Reagan dropped the top income tax rate from over 70% down to under 30%, all hell broke loose. With the legal and social restraint to unlimited selfishness removed, “the good of the nation” was replaced by “greed is good” as the primary paradigm.

In the years since then, mind-boggling wealth has risen among fewer than 20,000 people in America (the top 0.01 percent of wage-earners), but their influence has been tremendous. They finance “conservative” think tanks (think Joseph Coors and the Heritage Foundation), change public opinion (Walton heirs funding a covert effort to change the “estate tax” to the “death tax”), lobby congress and the president (who calls the “haves and the have-more’s” his “base”), and work to strip down public institutions.

The middle class is being replaced by the working poor. American infrastructure built with tax revenues during the 1934-1981 is now crumbling and disintegrating. Hospitals and highways and power and water systems have been corporatized. People are dying.

And Bush, following closely in Reagan’s footsteps, is making things worse. As Senator Bernie Sanders pointed out at recent hearings for the confirmation of Bush’s new nominee for the Office of Management and Budget:

Since Bush has been president:

• over 5 million people have slipped into poverty;
• nearly 7 million Americans have lost their health insurance;
• median household income has gone down by nearly $1,300;
• three million manufacturing jobs have been lost;
• three million American workers have lost their pensions;
• home foreclosures are now the highest on record;
• the personal savings rate is below zero - which hasn’t happened since the great depression;
• the real earnings of college graduates have gone down by about 5% in the last few years;
• entry level wages for male and female high school graduates have fallen by over 3%;
• wages and salaries are now at the lowest share of GDP since 1929.

The debate about whether or not to roll Bush’s tax cuts back to Clinton’s modest mid-30% rates is absurd. It’s time to roll back the horribly failed experiment of the Reagan tax cuts. And use that money to pay down Reagan’s debt and rebuild this nation.

Thom Hartmann (thom at thomhartmann.com) is a Project Censored Award-winning New York Times best-selling author, and host of a nationally syndicated daily progressive talk program on the Air America Radio Network, live noon-3 PM ET. www.thomhartmann.com His most recent books are “The Last Hours of Ancient Sunlight,” “Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights,” “We The People,” “What Would Jefferson Do?,” “Screwed: The Undeclared War Against the Middle Class,” and “Cracking The Code: How to Win Hearts, Change Minds, and Restore America’s Original Vision.”

http://www.commondreams.org/views04/0412-13.htm

Thomas Jefferson wrote in a September 28, 1821 letter, "The government of the United States, at a very early period, when establishing its tariff on foreign importations, were very much guided in their selection of objects by a desire to encourage manufactures within ourselves."

Conservatives don't want you to know this, and - even more frenetically - are working to prevent any discussion of "protectionist" tariffs on labor. Their main argument - a straw man - is that "productivity" is responsible for the loss of American jobs, not a fundamental realignment in the rules of the game of business starting in the Reagan era and climaxing with NAFTA and GATT/WTO.

Business publications love to quote 19th century economist David Ricardo as saying, in "On Wages," his 1817 work, "Labour, like all other things which are purchased and sold, and which may be increased or diminished in quantity, has its natural and its market price."

Thus, they say, it's natural that American wages should have been in a free fall ever since Bill Clinton signed NAFTA and GATT: America's roughly 100-million workers now have to compete "on a level playing field" with five billion impoverished people around the world. Offshoring is simply the normal extension, they say, of Ricardo's classic view of economics.

What they forget is that Ricardo also wrote, in the following sentence, "The natural price of labour is that price which is necessary to enable the labourers, one with another, to subsist and to perpetuate their race, without either increase or diminution."

In other words, labor is part of the game of business, and one of the first goals of the game of business is "to perpetuate" the working class's existence.

Yet everybody knows that games played without rules won't work. Boxers are divided into categories to ensure relative fairness in fights; baseball rules define the type of bats that can be used; football players are limited in how they can use their hands so they don't injure opponents or get unfair advantage.

What's lost on many Americans is that business is a game, too. The rules are defined by We the People through our elected representatives, and the goal is to provide for the "life, liberty, and pursuit of happiness" of American citizens.

The question Americans have faced since the first arguments between Jefferson and Hamilton in the 1780s was whether the game of business should be played with the primary goal of enriching the few, or - while allowing the few to enrich themselves - to enhance the quality of life of the many at the same time.

Modern conservatives suggest that if the rich win first, benefits will "trickle down" on the rest of us. Protecting workers, they say, will produce dislocations and abnormalities from the "free market." For example, they suggest that when minimum wages are fixed by government, and labor can lawfully bargain to increase wages by increasing scarcity of labor through union actions, that results in an increase in prices, ultimately hurting "the working person."

But Ricardo disagreed that rising wages first increased prices. He noted, "On the contrary, a rise of wages, from the circumstance of the labourer being more liberally rewarded, or from a difficulty of procuring the necessaries on which wages are expended, does not, except in some instances, produce the effect of raising price, but has a great effect in lowering profits."

And when wages go down, profits go up. American wages have been going down steadily since Reagan first reintroduced conservative economics in 1980, and American corporations just reported two of their most profitable quarters in decades. In part, this is because wages are not only going down within the US, but because US-level wages are being replaced by India- and China-level wages through outsourcing and offshoring.

"But offshoring isn't the problem for American workers!" conservatives shout. "It's the increase in productivity. American businesses need fewer workers because automation and hard work have made our workers more productive."

This is a tragic lie, and it's been bought hook, line, and sinker by most American politicians and even many economists.

Productivity is, very simply, the measurement of how many products or services can be produced for how many dollars of labor expended. But offshoring distorts productivity figures in two ways.

First, foreign labor is cheaper, but produces nearly identical amounts of product or service. The result is "increased productivity."

Second, many corporations don't put offshore labor onto their balance sheets as a labor expense. Because they hire offshore companies as subcontractors to do work previously done by their own employees, they get to reduce the number and cost of their employees while having an only slightly increased line-item on their P&L for the subcontractor. The result is that it looks like their remaining employees are getting more done, because the offshore employees are no longer counted in the productivity figures.

But the Indians and Chinese know something you won't hear on conservative "business" programs. While China and India eagerly let multinational corporations move work from America to their nations, they fiercely protect their own domestic industries primarily through the use of tariffs - taxes on imported goods - and the strict regulation of imported labor.

We should do the same. To return balance to the international game of business, America can again use tariffs to balance trade relationships. This is not a new idea, by the way - it's how America has protected its economy from the founding of this nation right up until Clinton signed NAFTA and GATT.

For example, Jefferson wrote in his diary on March 11, 1792, "Hamilton had drawn Ternant into a conversation on the subject of the treaty of commerce recommended by the National Assembly of France to be negotiated with us." France wanted concessions from America as a way of enhancing international relations, but was unwilling to reduce her own tariffs. Jefferson noted, "Hamilton communicated this to the President, who came into it, and proposed it to me. I disapproved of it, observing, that such a volunteer project would be binding on us, and not them; that it would enable them to find out how far we would go, and avail themselves of it."

George Washington was more of Hamilton's mind. "However," Jefferson wrote, "the President thought it worth trying, and I acquiesced. I prepared a plan of treaty for exchanging the privileges of native subjects, and fixing all duties forever as they now stood. Hamilton did not like this way of fixing the duties, because, he said, many articles here would bear to be raised, and therefore, he would prepare a tariff. He did so, raising duties for the French, from twenty-five to fifty per cent. So they were to give us the privileges of native subjects, and we, as a compensation, were to make them pay higher duties."

The deal ultimately fell through - Jefferson saw it as Machiavellian scheme by Hamilton to try to irritate England - but it shows how tariffs were an important aspect of American foreign policy from the administration of George Washington up until Bill Clinton got us into the World Trade Organization, thus eliminating most tariffs and trade "restrictions," letting multinational corporations instead of sovereign nations write the rules of international business.

To solve the crisis of the disappearance of America's middle class the United States should pull out of the WTO and other multilateral treaties that give corporations the power to enforce their will on our government and on our workers. This will again allow us to impose leveling tariffs on work done overseas. Offshore labor can then be set in price - by adding tariffs to it - to equal a living wage in the United States.   If a company wants to hire people to answer the phone in India for two dollars an hour, fine. Let them do it - and pay a $10/hour tariff on top of the $2/hour wage. Most will simply return to the United States for their labor, and those that don't will enhance government coffers with funds that can be used for national healthcare and education of our workforce.

By walking away from the ABM and Kyoto accords, George W. Bush taught Americans that we really do have the power to simply ignore or disavow international treaties we've already committed to. It's time to apply that experience to GATT/WTO/NAFTA and return to our Founders' ideal of a nation where the rules of trade and business are, as Jefferson said, "very much guided" by the interests of We the People, rather than a handful of multinational corporations.