Class Warfare Continues

The GOP is playing its (not Donald) trump card.

Or maybe it's not their trump card, but I needed to make the pun. Even before President Obama gave his speech this morning about the economy, GOP leaders were out with what lamentably has become known as the "prebuttal."

Leading the way was plutocrat Paul Ryan, so concerned about middle class America that early this year he introduced a budget featuring eventual elimination of Medicare. Sunday morning the House Budget Committee chairman contended

Class warfare, Chris, may make for really good politics but it makes for rotten economics. We don’t need to divide people and prey on people’s fear and envy and anxiety. We need to remove the barriers so entrepreneurs can hire people. These tax increases don’t work. [...]

This is a double tax… If we tax investment and tax more you will get less of it. It looks like to me not a very good sign. It looks like the President wants to move down the class warfare path. Class warfare will simply divide this country more, will attack job creators, divide people, and it doesn’t grow the economy.

Class warfare is something Republicans know well- they've been practicing it for decades, though never as enthusiastically as in the recent years. David Cay Johnston explains

When Reagan was elected president, the top marginal tax rate (the tax rate paid on the last dollar of income earned) was 70 percent. He cut it to 50 percent and then 28 percent starting in 1987. It was raised by George H.W. Bush and Clinton, and then cut by George W. Bush. The top rate is now 35 percent.

Since 1980, when Reagan won the presidency promising prosperity through tax cuts, the average income of the vast majority—the bottom 90 percent of Americans—has increased a meager $303, or 1 percent. Put another way, for each dollar people in the vast majority made in 1980, in 2008 their income was up to $1.01.

Those at the top did better. The top 1 percent’s average income more than doubled to $1.1 million, according to an analysis of tax data by economists Thomas Piketty and Emmanuel Saez. The really rich, the top one-tenth of 1 percent, each enjoyed almost $4 in 2008 for each dollar in 1980.

The top 300,000 Americans now enjoy almost as much income as the bottom 150 million, the data show.

As the pie chart (from the Center for Budget and Policy Priorities from Congressional Budget office data) indicates, the share of the nation's after-tax income rose for the top 1% from 7.5%to 17.1% from 1975 to 2007 while dropping for the bottom four-fifths from 57.9% to 48.9%.

As Johnston emphasizes, the gap has been growing primarily since President Reagan introduced the concept of cutting taxes to bleed government. The table below, derived from IRS statistics, indicates that tor those people not in the top 10% of the income distribution, real income grew by 75% from 1950 to 1980- and by only 1% from 1980 to 2008.

The GOP does have a plan, one based on cutting taxes of corporations and the wealthy and making sure that the slack is picked up by poor and middle class Americans who benefit from the child care tax credit, the earned income tax credit, unemployment compensation, or Social Security. With the overall total tax burden the lowest it has been since 1958, most Republicans are willing to see taxes rise, as long as those least able to pay are the ones giving to the I.R.S.

So, yes, there is class warfare going on in the U.S.A.- and it has been raging for well over a quarter century. It was started by a relatively moderate conservative, Ronald(6) Wilson(6) Reagan(6), ramped up by "you've covered your ass" George W. Bush, and escalated by the post-Bush GOP. It's being won by the Republican Party, with President Obama's speech today but a small effort to fight back.

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