Lawrence Mishel of the Economic Policy Institute is such a sensible economist that I could quote him every day. But it is exasperating in a way. He is known as a “liberal” economist. But there is nothing especially liberal about him. He is just what my father would call “common sense.” This is just part of the decay of political debate that has been going on my entire life. It is now the case that what used to be entirely conventional economic policy is now considered liberal or even “radical.” Just look at the situation in Greece. The new Greek government is making all kinds of sense, but it is the totally unreasonable German government that is considered respectable.
Yesterday, Mishel wrote, Even Better Than a Tax Cut. The “big news” is that both the Democratic and Republican parties are keen to attack income inequality with… tax cuts. Oh yeah, the woman working at Walmart for minimum wage for 29 hours per week (So they don’t have to provide any benefits!) already doesn’t pay any federal income taxes. So just how is it that reducing taxes is going to help her? Are we going to see a reduction in the payroll tax? What would it be replaced with? And increase on the cap? Don’t count on it.
The main aspect of this is just that there is no way that we are going to get tax cuts that don’t disproportionately help the rich. Why do I say that? Because tax cuts are always proposed as being focused on the middle and lower classes, and they always end up enriching the rich. But Mishel is correct that the Democratic plans — “expanded child care credits or a secondary earner tax break” — could at least help in the short term — if they got enacted as proposed (and they wouldn’t). But tax breaks just aren’t going to change the basic situation. As Mishel noted, “What has hurt workers’ paychecks is not what the government takes out, but what their employers no longer put in — a dynamic that tax cuts cannot eliminate.”
Of course, the Republican plans are a total joke:
Similarly, President George W Bush’s 2001 and 2003 tax cuts, which likewise promised to increase middle-class income, were followed by slower productivity and wage stagnation. The latest proposed Republican cuts won’t even provide much short-term relief, as they tend to be targeted at the highest-income households. For example, under a much-touted proposal by Representative Dave Camp of Michigan, the middle fifth would gain just $279 in tax relief a year, according to the Tax Policy Center, while the top 0.1 percent would garner the largest rate cut, valued at $248,000.
Mishel’s main point is not to knock the tax cut proposals. The truth is that they are laughable and why anyone takes them seriously at this point amazes me. Mishel’s main point is to discuss policies that actually would decrease income inequality. And the list ought to sound pretty familiar to people who read this blog:
- The Federal Reserve needs to liberalize itself and stop holding back the economy with its excessive focus on inflation.
- Don’t do any more job killing, rent enhancing trade deals like the TPP and TTIP.
- Raise the minimum wage so that it is equal to half the average American wage ($12.50 by 2020).
- Raise the amount a worker can make and still qualify for over-time pay.
- Protect and expand worker’s rights: including the right to unionize, which has been decimated.
- Enhance laws against businesses that steal from their employees.
That’s a funny list. There isn’t a single item there that wouldn’t get a super-majority if we polled the American people. But precisely because these are measures that would decrease income inequality, the power elite are against them. And as a result, no one will talk about this stuff in the 2016 general election. Instead, we will get “Tax cuts!” And “Reduced regulations!” And “Education!” None of it will help to fix the problem, but it’s something for politicians to talk about while income inequality grows.
Mishel ends with one the clearest descriptions of the problems we face:
But that’s not what the power elite want us to talk about. So instead, we will get these pretend solutions that are meant to do nothing other than stall while nothing is done.