Recently economists and commentators have been debating how much richer the rich have gotten since the Great Recession. Republicans have decided shouldn’t be just sitting around yapping about it — we should get busy trying to make the richest richest-er.
New York Magazine‘s Jonathan Chait took a look at the new proposal from Marco Rubio and Mike Lee and found “a gigantic tax-cut plan that would reduce federal revenue by $2.4 trillion over a decade, a larger tax cut than George W. Bush passed in 2001. What’s more, the Lee-Rubio plan lavished far more benefits on the rich.”
Rubio and Lee aren’t alone:
Jeb Bush is wooing the fanatically anti-tax Club for Growth. Scott Walker has firmly allied himself with the party’s most unreconstructed supply-siders. Rand Paul is promising “the largest tax cut in American history.” Ted Cruz is, well, Ted Cruz. The Republican primary has turned into a contest of anti-tax purity. “We’ve got maybe an embarrassment of riches here in that we’ve never been able to support somebody before, and now we may get overwhelmed with people we think are worthy of support,” gloats recently departed Club for Growth president Chris Chocola.
In the real world, we’re facing a wealth gap that’s larger than at any time in at least a century.
The richest 300,000 or so Americans take in more each year than the bottom 60 percent—about 180 million Americans—combined. And their income has increased by a factor of five since 1979. The slight household increases in the incomes of the lower 99 percent of American are largely attributable to more members of the family joining the workforce and everyone working longer hours.
These trends took flight in 1980, right about the time conservative economics began to take hold in America. This isn’t a failure of conservative economics. It’s worked perfectly. The point on lower taxes on the rich and fewer regulation is to suck money to the top. And it does — but apparently not enough for Rubio, Lee, Bush, Paul and Walker.
Faced with the best job growth of the century and the first 12 months straight of job gains over 200,000, Republicans have been forced to care about two statistics that they never worried about as those numbers languished under George W. Bush — labor participation and wage growth.
Labor participation is hard to read given Baby Boomers are now retiring. Economist Justin Wolfers sees the mostly flat rate over the past few months as a sign that people are reentering the workforce as older people leave. The real issues are wages, which are definitely miserably stagnant and have been miserably stagnant since 1974 — coincidentally this is right around the point in history when big businesses decided to simultaneously focus on lobbying while pursuing near-term shareholder gains over long-term sustainability.
Wages are the problem. If they go up, people will flood into the workforce.
The Roosevelt Institute’s Mike Konczal has a new piece for The Nation where he lays out the three reasons wages stagnate and why they rose for the working class during the middle of the 20th century:
He says liberals are resigned to low wages. Republicans, on the other hand, seem determined to make them far worse.
Rubio and Lee’s plan would get rid of all taxes on investment, in effort to raise decrease unemployment — even though we can see now just decreasing unemployment isn’t enough to increase wages.
Remember how billionaire Warren Buffett pointed out that he shouldn’t be paying a lower tax rate then his secretary? Rubio and Lee are saying he shouldn’t be paying any tax rate. Mitt Romney’s rate would sink to almost zero, if it isn’t there already.
Regulations have encouraged executives to focus all of their attention on stock prices, which determine their compensation — which has skyrocketed since 1982 when the rules first changed. Rubio and Lee’s plan would further the shift to focusing on immediate gains which can be sucked up tax free.
The third element in raising wages isn’t just neglected by conservatives — they’re actively trying to make it worse. Scott Walker’s union busting tactics echo those adopted in low-wage state throughout the south. And the demise of unions closely traces like shrinking share of income for American workers.
This explains why wages, job growth and all economic measures do better under Democratic presidents.
Republicans think that there’s nothing wrong in America that can’t be fixed by doing more of what’s wrong with America. They think we need lower taxes on the rich, fewer regulations on Wall Street and more ground troops in Iraq. And many of them literally think we need a guy named Bush to put it all together.
Republicans clearly think we have inequality problem. They think we’re not unequal enough.