Monday, November 14, 2016

How to fix America - and how not to

Scriber’s opinion is that the biggest driver of the unanticipated (and unsettling) win by Trump and, yes, the GOP, is the rise of economic inequality over the last 40 years.

Income inequality now rivals that in the 1920s just prior to the big correction (aka great depression). The gap between rich and poor continued to widen regardless of which party was in the White House and regardless of which party controlled Congress. For everyone other than the wealthy income was stagnant (or slightly decreasing) while the cost of living increased. The additional product of that gap was the destruction of the middle class.

So the working class Democrats, likely union members, were stiffed by their own party. Everyone else in the working class was stiffed by the Republicans. “Trickle down economics” did not work for anyone other than the ultra-rich. The pitchforks arrived and the result was not pretty.

By the time Eisenhower won the presidency the marginal tax rate was 90%. By the time Reagan was in office the rate was in the 60s. Ever since, the tax rates have been lowered and lowered, in effect a tax policy that favored the wealthy and penalized the rest. Carl Pegels, a retired economics professor, argues for a reversal of that trend in today’s Daily Star, Income and wealth inequality pushed political upset. Here are snippets.

Sociologists and economists have warned that the inequality will cause major unrest. The unrest was reflected by the vote of that part of the population that was most seriously affected.

Some initial steps to respond to the unrest is delineated below. If the new administration does not address the problem it will be dumped in the next election.

The new administration will have to provide a quick and decisive initiative. The initiative should be a response to the income inequality through an immediate relief for those most seriously affected. A long-term response to the income and wealth inequality should also be addressed.

Pegels favors a progressive income tax with a marginal rate returned to the 60s. He also argues for eliminating the Social Security withholding for low income families and lifting the cap and collecting the withholding for all sources of income.

How likely is all that? Pegels says “The present maximum income tax is about 39.6 percent and Trump wants to lower it to 36 percent.” So already reasonable tax policy changes are going down for the count. It gets worse.

Kevin Drum at Mother Jones lists the Trump transition team members. It’s full of corporate lobbyists.

… it turns out that Trump doesn’t hate lobbyists all that much after all. That whole “Drain the Swamp” thing was just red meat for the rubes. The Associated Press reports that far from hating lobbyists, Trump absolutely adores them.

Here’s some of the list.

Cindy Hayden…top lobbyist for Altria, the parent company of cigarette-maker Philip Morris…Homeland Security Department. Jeff Eisenach, a consultant and former lobbyist…Federal Communications Commission….Michael Korbey…former lobbyist who led President George W. Bush’s effort to privatize America’s retirement system….Shirley Ybarra…champion of “public-private partnerships” to build toll roads and bridges….Myron Ebell…man-made global warming is a hoax…David Malpass…Bear Stearns’ chief economist…Dan DiMicco…former chief executive of steel company NUCOR and a board member at Duke Energy…Former Rep. Mike Rogers…serves on boards for consulting firms IronNet Cybersecurity and Next Century Corp.

Buckle up. This is going to be a rough ride.

Our tax policies and practices might be the first casualty of that ride.

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