Robert Reich on the Tax Deal

Robert Reich, "Why the Obama Tax Deal Confirms the Republican World View," Huffington Post, December 8, 2010.

Here's the real story. For three decades, an increasing share of the benefits of economic growth have gone to the top 1 percent. Thirty years ago, the top got 9 percent of total income. Now they take in almost a quarter. Meanwhile, the earnings of the typical worker have barely budged.

The vast middle class no longer has the purchasing power to keep the economy going. (The rich spend a much lower portion of their incomes.) The crisis was averted before now only because middle-class families found ways to keep spending more than they took in -- by women going into paid work, by working longer hours, and finally by using their homes as collateral to borrow. But when the housing bubble burst, the game was up.

The solution is to reorganize the economy so the benefits of growth are more widely shared. Exempt the first $20,000 of income from payroll taxes, and apply payroll taxes to incomes over $250,000. Extend Medicare to all. Extend the Earned Income Tax Credit all the way up through families earning $50,000. Make higher education free to families that now can't afford it. Rehire teachers. Repair and rebuild our infrastructure. Create a new WPA to put the unemployed back to work.

Pay for this by raising marginal income taxes on millionaires (under Eisenhower, the highest marginal rate was 91 percent, and the economy flourished). . . .

Level the Playing Field?

Robert Reich in the New York Times today -- "How to End the Great Recession":

THE Great Depression and its aftermath demonstrate that there is only one way back to full recovery: through more widely shared prosperity. In the 1930s, the American economy was completely restructured. New Deal measures — Social Security, a 40-hour work week with time-and-a-half overtime, unemployment insurance, the right to form unions and bargain collectively, the minimum wage — leveled the playing field.

Reich argues that we cannot recover from the long structural recession until the middle class is able to buy the goods in produces.

Robert Reich on the AIG Bonuses

Robert Reich sensibly suggests that the way to end the abuses at AIG is to send it into bankruptcy and rebuild it from there. This course has the danger of cascading defaults, of course, but it would allow for structured re-building, and it would allow the bonuses to be cancelled.

I'm no lawyer, and no economist, but it is interesting to follow the rhetoric surrounding this situation, and the way the bonuses, more almost than any other even in the past months, has momentarily unified the country in populist outrage.

Huey Long would have a field day.

FDR would find a way to act, and would find a way to explain and condemn -- and point to a way forward.

President Obama seems to be finding ways to do this, but he can't be engaged in a running commentary -- nor could FDR in his own time. The onrushing news cycle keeps giving all the rest of us plenty to react to, but any president would soon wear out our patience if he or she commented daily on the latest buzz. Instead, comments, speeches, and appearances need to be timed (and placed) so that there is an ongoing sense that things are being seen, understood, and, where appropriate, acted on by the administration.

Would we be better off if our president maintained a public twitter account to report moment by moment reactions? No, I don't think so either.