Class War in America: the Book

Economic absurdities that
Democrats must expose:


...because it's wrong to penalize success and hard work.


...therefore, we should eliminate the capital gains tax.


...After all, they came from, and understand, business.


...even though it is based on pitting the worlds' workers against each other.


...union bosses are only out for themselves.


...and the more the rich have, the more will trickle down to everyone else.


...Democrats are communists, or at least, socialists at heart.


...so when we tax wealthy investors, we lose jobs.


...so investors, not workers, create wealth.


...so we should give them all the tax breaks possible.


...Democrats just want to tax and spend today.


General Issues:

...check out this 2-minute video.


...It's a mountain, and a terrible defense of globalization.


...for those of Indonesia, Mexico, China and India.


...and how not to do it again.


...and the "crisis" is just a ploy by those who want to destroy it.


...Republicans' most important propaganda technique.


...and get the media on your side




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Feel free to download this material for personal, not-for-profit, use. If you duplicate it for others, attribute it to Charles M. Kelly, and with a link to this site. Print copies are still available at Amazon and Barnes & Noble, and used copies are widely available on the internet.


11.

Taxes, and the 1993 Lesson in Econ. 101

When conservatives argue that raising taxes on rich people is bad for the economy or that it costs jobs, don’t make the usual responses that the country needs the money, the rich can afford it, and it won’t hurt them as much.

Republicans like Bill Archer, Phil Gramm, Dick Armey, Trent Lott, Tom Kasich, and the general run of right-wing spin-doctors love to attack reasons like these. It gives them an opening to criticize higher taxes on the rich as a matter of fairness, since the wealthy already pay so much more tax than poor people do. Their hypocrisy knows no bounds.

It would be much better to point out that our richest citizens have benefited the most from the economic policies of the past 20 years. The wealthy not only caused these policies, but they knowingly forced huge sacrifices on working Americans as a result of them.

It’s only fair that they return to society, in the form of tax payments, some of the money they extracted from the incomes of working Americans and to compensate, at least a little, for the deplorable working conditions that resulted from their skullduggery.

Then point out that never in recent history has raw greed been so richly rewarded. Between 1942 and 1962, the income tax rate for our richest citizens was at least 88%, and as high as 91%. It’s no accident that this was probably the most prosperous period in our nation’s history for working-class Americans.

In those days, when a CEO considered firing thousands of workers for a million-dollar bonus, the moral condemnation didn’t seem to be worth it. After taxes, the bonus amounted to, say, only $120,000.

Today, when a CEO fires thousands of workers, he gets a ten million-dollar bonus and he gets to keep five million of it. Suddenly we’re talking serious money here. When he retires he can move to one of our country’s guarded communities—with his millionaire cronies—and he gets virtually no moral condemnation from his golfing buddies.

We need to go back to the tax rates we had for our richest citizens between 1942 and 1962. Or, we could go to the rates we had from 1962 to 1982, when it was at least 70%. Those weren’t the best of times for workers but they were a hell of a lot better than the 1980s and ’90s.

And by the way, over that period of forty years between ’42 and ’82, none of the bad things that conservatives warn about happened. We didn’t have massive unemployment, we didn’t stifle innovation or economic growth, and, above all, we didn’t become communists.

Of course, history, facts, and reason mean little to modern conservatives. Just look at how the Republicans deceived the public about the 1993 deficit reduction package and what they said it would do to the economy. Even The Wall Street Journal couldn’t avoid describing how the Republicans “misled” the public about it.

Under the head, “A Vote for Clinton’s Economic Program Becomes the Platform for Often-Misleading GOP Attacks,” the Journal explained that

Contrary to Republican claims, the 1993 package with a $240 billion tax increase is not “the largest tax increase in history….” Moreover, except for a small gasoline-tax boost and an increase for the best-off Social Security recipients, the tax increases in last year’s bill mostly didn’t touch the middle class but hit the wealthiest 1.2% of Americans.  

   GOP candidates also ignore the bill’s tax cuts for individuals and businesses, and nowhere do they describe the plan as a $433 billion, five-year deficit-reduction package.1

“Often-Misleading GOP Attacks.” That’s about as close as the Journal will ever come to calling Republicans liars. “Contrary to Republican claims” is another way of saying the same thing. 

Not only was the 1993 package not the biggest tax increase in history, it was a $433 billion, five-year deficit-reduction package that, unlike the tax bills of the 1980’s, actually worked! Three years after the 1993 tax-on-the-wealthy increase, the Journal followed up with an article titled, “Scary Deficit Forecasts for Clinton Years Fade As Tax Revenue Grows,” and concluded that

Clearly, a stronger-than-expected economy has a lot to do with it. The tax increases in the 1993 deficit-reduction package that Mr. Clinton pushed through get credit as well. And, to a lesser extent, so do the spending cuts engineered by the Republican Congress.…

   By the CBO’s analysis, just over half of the $97 billion increase beyond projections is due to tax boosts in Mr. Clinton’s 1993 antideficit plan. The rest is due to a variety of factors.2

Year later, same story. Four years after the 1993 legislation, the deficit was continuing to go down and the economy was still booming at an alarming rate. In the article, “Tax on Wealthy Is Boosting U.S. Revenue; Treasury Says 1993 Increase Is Helping Cut the Deficit,” the Journal again described who the tax increases in 1993 actually affected—the wealthy and corporations:

President Clinton sold the 1993 income tax increase as a way to shrink the budget deficit at the expense of the rich.

   Republican adversaries predicted it wouldn’t generate much revenue because the rich would work less and take bigger deductions. Now there’s growing, if still tentative, evidence that Mr. Clinton may have been right after all.…

   “The available data suggest the surge in tax collections has come from the taxpayers with high incomes, who were the only ones affected by the 1993 changes,” says Deputy Treasury Secretary Lawrence Summers.3

Republicans are the guardians of working Americans and they’re concerned about their jobs, right? And what scary forecasts did they make about the 1993 deficit reduction package?

“Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating.… Who can blame many second-earner families for deciding that the sacrifice of a second job is no longer worth it?”

      —Rep. Dick Armey, (Republican, Texas)

“The tax increase will…lead to a recession…and will actually increase the deficit.”

      —Rep. Newt Gingrich (Republican, Georgia)

“I will make you this bet. I am willing to risk the mortgage on it…the deficit will be up; unemployment will be up; in my judgment, inflation will be up.”

      —Sen. Robert Packwood (Republican, Oregon)

 “The deficit four years from today will be higher than it is today, not lower.”

      —Sen. Phil Gramm (Republican, Texas)

  

The 1993 deficit reduction legislation got not a single Republican vote. And the economy has been booming so much ever since, their conservative financial backers have been trying to figure out ways to slow it down, without cutting into corporate profits.

As you read the following comments—and given the verifiable details of the 1993 Deficit Reduction legislation and its known results—you have to wonder about the motivations and honesty of these two prominent Republican leaders:

Senator Robert Dole, January 25, 1994, Republican response to President Clinton’s State of the Union Address:

The President promised a middle-class tax cut, yet he and his party imposed the largest tax increase in American history. We hope his higher taxes will not cut short the economic recovery and declining interest rates he inherited.… Instead of stifling growth through higher taxes and increased government regulations, Republicans would take America in a different direction.

New Jersey Governor Christie Whitman, January 25, 1995, Republican response to President Clinton’s State of the Union Address (this address was after the 1994 Journal article described how the Republicans had misled the public about the 1993 legislation):

While at times some of the President’s ideas sounded pretty Republican, the fact remains that he has been opposed to the balanced budget amendment, he proposed even more government spending, and he imposed the biggest tax increase in American history.

For added insights into the conservative mentality, look at the Journals take on the 1993 legislation five years after the 1993 tax-increase-on-the-wealthy. Under the head, “Again, the Rich Get Richer, but This Time They Pay More Taxes,” it noted that

The rich are paying a lot more taxes. In fact, an unanticipated flood of revenue from upper-income taxpayers—particularly from those cashing in stock options, enjoying hefty bonuses or taking stockmarket profits—is a big reason the federal deficit has vanished.… Those well-off Americans did pay $18 billion more income tax in 1995 than in 1993, but their total incomes rose by a whopping $57 billion.…

   [Republican House Majority Leader Richard Armey of Texas, “one of the loudest critics of those increases”] says tax-increase supporters lack “the ability to see what might have been had we not created this folly”—in his view, an even stronger economy.…

   Call it envy or call it fairness, many Americans still don’t think the rich pay enough.4

You can’t find a more credible source: The Wall Street Journal leaves no doubt that taxes on the wealthy not only reduced the deficit, but also had no negative effect on the economy—which not only grew, but exploded.

For those who worry that our mistreated rich citizens are suffering an unfair tax burden, note that:

§         While they paid $18 billion more in taxes, their net income went up three times as much. Approximately 98.8% of  Americans—the ones whose sacrifices made it all possible—would love to change places with them.

§         The data also demonstrate the absurdity of Republican claims that raising taxes on the wealthy destroys their desire to become richer by working harder.

§         For full-fledged, genuine, world-class hypocrisy, nothing can match Armey’s canned reply from the Republican playbook: “Workers would have been better off if we had stimulated the economy even more by not raising taxes on the wealthy.” Armey and his fellow conspirators know damn well that their biggest concern for the previous five years was that the economy was growing too fast—with the accompanying danger that wages might start to go up.

§         “Call it envy or call it fairness.” How about calling it anger and fairness? “Envy” suggests sniveling wimps huddled in a corner, resentful of others’ success—and is one of the right wing’s most popular hot-button words. Righteous anger, on the other hand, describes the feelings of those who understand the gross injustices that the past 20 years of economic warfare have imposed on working Americans.

Getting back to whom the 1993 legislation really affected, even Forbes told it like it was, in the context of complaining about the injustice of it all. In a whining article entitled, “Taxing the Rich,” it acknowledged that

[The “1993 Clinton income tax hike”] fell almost entirely on the top 1% of income earners (taxable income above approximately $200,000), and was retroactive for that year.5 

   Lars-Erik Nelson summed up the Republican hypocrisy best when he made the following observations about how “Tax-cut politics wins votes”:

In his acceptance speech, [Bob Dole] accused “some genius in the Clinton administration” of raising taxes so that “somewhere a grandmother couldn’t afford to call her granddaughter, or a child went without a book, or a family couldn’t buy that first home because there just was not enough money to make the call, buy the book or pay the mortgage.”

   Poor grandma had to be making over $50,000 a year, including her Social Security income, if she got hit by the Democratic increase in taxes on Social Security benefits.  The kid who couldn’t afford the book and the first-time home buyer had to be in a family earning more than $143,000 if they were touched by Clinton tax increases.

   In fact, Clinton cut taxes for the working poor by expanding the Earned Income Tax Credit.6

Compare Forbes and the Journal’s descriptions of the effects of the 1993 legislation—with the phony sob story that Bob Dole fabricated for public consumption.

The shame of it all is that many of the middle class and the working poor were convinced by Dole and his fellow Republicans that they had been personally hurt by the 1993 legislation. Certainly—judging from letters to the editor, callers to talk-radio and talk-T.V.—most members of the middle class felt that they had become significantly worse off.

The inescapable fact is that most Republicans systematically and deliberately deceived the American public about the 1993 deficit re-duction legislation and its effects.

Now let’s look at what they’ve been up to since then.


      

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