Republicans struggle to attack Obama economy they failed to sabotage and want to take credit for
Republicans are in an amazing bind.
The first year of the Affordable Care Act marketplaces didn’t destroy the economy. Neither have two straight years of higher taxes on the rich. Instead, we got the best year of job creation of the century.
Conservatives go two ways on this.
Some Republicans like Mitch McConnell have tried to to take ownership of what they used to derisively call Obama’s economy. It was joy at the GOP taking over the Senate that started the boom in January. Others say we created 1.8 million new jobs last year long-term because Republicans let long-term unemployment insurance benefits expire. The beatings continued until morale improved. Turns out that’s not true. Others credited Texas — which has roared when gas prices were high. The nanny state did save Texas’ economy from the housing bust much of America experienced. But it turns out compared to new health care jobs, Texas’ job growth isn’t too impressive.
A more virulent strain of conservatives can’t give Obama credit for anything. So they point to statistics they ignored during the Bush years, like the labor participation rate, which reveals twin epidemics of Baby Boomers retiring and young people going to college.
The idea of relying on stat no one has heard of that makes it seem as if you oppose retirement and school doesn’t appeal much to Republican presidential candidates. So they’ve seized on the issue of income inequality — which should be called the wealth gap.
This is hilarious on its face. Republicans complaining about inequality is like Apple whining that you have to buy a new iPhone too often. This is why they are in business.
Inconvenient realities won’t stop Republicans from running on this issue, if it’s all they’ve got. After all, Mitt Romney ran for president last time on the premise that his one great accomplishment as governor — Romneycare — was about to destroy the nation. But here’s why that won’t work for them:
— Justin Wolfers (@JustinWolfers) January 28, 2015
This chart updates one the Congressional Budget Office released in 2011 that helped popularize the notion of the the 1 percent. Back then, 1 percent — we learned — had seen 275% increase in their income while the poorest achieved only marginal gains. Later we learned that huge chunk of those gains go to the richest .01 percent — who often pay lower tax rates than their fellow 1 percenters.
You’ll notice that the slope of the 1 percent’s income spikes three times on this chart.
In the early 80s — when Reagan cut taxes for the rich. In the late 90s when Clinton signed a Republican-inspired cut in the capital gains tax rate in exchange for creating the State Children’s Health Insurance Program. Then again in the early 2000s, when Bush and the GOP cut taxes for the rich to the lowest point since the New Deal.
It also spiked again after the recovery from the Great Recession began. This is the spike Republicans want to blame on Obama.
But here’s the problem.
Up until 2013, tax rates on the rich were still at Bush levels and the stock market was exploding largely fueled by stock buybacks geared entirely to compensate executives and speculators, also known as the the 1 percent. We had record high corporate profits and record low wages.
No Republicans were complaining then.
Tackling the wealth gap requires a straightforward attack monied interests, which is why Republicans generally avoid the subject or insist that it’s really about “mobility” or other euphenisms.
We need to make sure profits lead to widespread gains by empowering workers to negotiate on a more equal footing — and we need to tax those who benefit most from our shared investments to feed future success.
We need to do things like Obamacare — which tax the rich to help the working poor and middle class gain health insurance. Except for the Earned Income Tax Credit, it’s the first serious new attempt to take on inequality since the 1960s.
Republicans oppose it because, they say, it hurts the economy and feelings of freedom. In fact, the economy has blossomed and workers have more freedom to start their own businesses or work on a freelance basis.
Instead of calling for policies that would fix inequality, Republicans will call for huge tax breaks on the rich through things like the flat taxes. We know this increases inequality because many states have embraced this philosophy and all it does it make it more expensive to be poor.
Republicans could call for a renewal of the labor movement, whose decline has almost exactly tracked the decline of middle class incomes. HAHAHA.
Or Republicans could do what Democrats should be doing: calling for the end of Rule 10b-18 of the Securities Exchange Act, which enables trillions of dollars in open-market stock buybacks that have helped to turn corporations into self-cannibalizing “trickle down” machines exist to run up stock prices at the cost of shared prosperity and long-term sustainability.
President Obama is continuing the Democratic tradition of his economy kicking the ass of the economy of his Republican predecessor. Of course, if that a weren’t true, we’d all be in bread lines right now.
A lot more needs to be done to fix decades of warping our economy on behalf of the richest. But we may have gotten a good start.
In 2013 — the first year taxes went up on the rich in two decades and the second best year of job creation of this decade — the 1 percent’s income dropped, both the inflation-adjusted earnings and the share of total income earned. This preliminary data is blurred by changes in the tax laws and economist Justin Wolfers doesn’t see it as proof of a decrease in wealth suckage by the richest.
Still, if you find one Republican who praises any decrease in the 1 percent’s share of our income, then I’ll take them seriously when they talk about income inequality.
[Image by John Gall Photography | Flickr]