As of Tuesday, February 12, 2013
To the editor:
Maybe I have just lived too long, but historically, a balanced package to avoid the so-called “fiscal cliff” and “sequester” problems, lower unemployment, and eventually reduce the federal deficit would include considerably higher taxes on the richest Americans and much less near-term spending cuts than any of the current proposals.
Here are some reasons why: (1) The top income tax bracket rate was raised from 25 percent to 63 percent in 1933, to 79 percent in 1936, and finally to over 90 percent in 1944, remaining there through the Eisenhower Republican administration and at 70 percent or above on through the Nixon and Ford Republican administrations until the Reagan administration drastically lowered it during the 1980s; (2) Beginning with this tax-raising on the rich, the US economy, fueled by greatly increased government spending for job creation before and during World War II, boomed thereafter like never before and the federal deficit plunged despite it being 123 percent of GDP at war’s end (it is about 70 percent now); (3) Between the 1930s and 1980 CEOs made at most 40 times the average wages of their workers, whereas it is nearly 400 times today; and (4) The top 1 percent currently owns at least 42 percent of the national wealth (and pays only 22 percent of the nation’s taxes), similar to the huge inequality of wealth when the Great Depression hit in late1929.
Granted, this strategy of high government spending and high tax rates on the rich to raise revenue in the 1930s and 1940s was needed — and effective — in recovering from the Great Depression. But that is why the same strategy should be used now because when the big banks were failing in 2008, Fed Chief Ben Bernanke warned that the consequences of inaction would be worse than the Great Depression with its begging in the streets and 25 percent unemployment rate.
That led to then-President Bush’s unpopular 2008 TARP bailout which, along with President Obama’s 2009 economic stimulus package, is credited by most economists with largely averting the complete economic collapse that Bernanke so feared.
However, more federal spending on job creation, e.g. Obama’s proposal to restore our crumbling infrastructure, is still needed to further jump-start the private sector and complete our economic recovery.
Underwood, WA 98651