Thursday, April 12, 2007

I'm with Huey Long ... Let's "Soak the Rich!"

Huey Long is truly fascinating. I can't help but think how he and some of the old school Populists like Henry Wallace (or perhaps even Alabama's Lister Hill or John Sparkman or big Jim Folsom or ...) would respond the foolishness of tax/economic policies built on "Supply Side" theories. I expect they'd have a fine time tearing these Republican fantasies to shreds.

A few days ago I ran across Bruce Bartlett's Op-Ed in the Gray Lady titled "How Supply-Side Economics Trickled Down" and started to post off it. Folks may recall that Bartlett worked under both The Gipper and Bu$h the Elder. Today I located another NYT Busines Section piece from Robert H. Frank titled "In the Real World of Work and Wages, Trickle-Down Theories Don’t Hold Up".

Bartlett wrote, in part:
Today, supply-side economics has become associated with an obsession for cutting taxes under any and all circumstances. No longer do its advocates in Congress and elsewhere confine themselves to cutting marginal tax rates — the tax on each additional dollar earned — as the original supply-siders did. Rather, they support even the most gimmicky, economically dubious tax cuts with the same intensity.

I'm hardly a fan yet even this "Supply Side" cheerleader, at least back in the day, knows the doctrine had gone way off the reservation. He suggests a proper burial. Amen!

Mr. Frank begins his effort with:

When asked why he robbed banks, Willie Sutton famously replied, “Because that’s where the money is.” The same logic explains the call by John Edwards, the Democratic presidential candidate, for higher taxes on top earners to underwrite his proposal for universal health coverage.

Providing universal coverage will be expensive. With the median wage, adjusted for inflation, lower now than in 1980, most middle-class families cannot afford additional taxes. In contrast, the top tenth of 1 percent of earners today make about four times as much as in 1980, while those higher up have enjoyed even larger gains. Chief executives of large American companies, for example, earn more than 10 times what they did in 1980. In short, top earners are where the money is. Universal health coverage cannot happen unless they pay higher taxes.

Trickle-down theorists are quick to object that higher taxes would cause top earners to work less and take fewer risks, thereby stifling economic growth. In their familiar rhetorical flourish, they insist that a more progressive tax system would kill the geese that lay the golden eggs. On close examination, however, this claim is supported neither by economic theory nor by empirical evidence.

He closes with:

In the United States, trickle-down theory’s insistence that a more progressive tax structure would compromise economic growth has long blocked attempts to provide valued public services. Thus, although every other industrial country provides universal health coverage, trickle-down theorists insist that the wealthiest country on earth cannot afford to do so. Elizabeth Edwards faces her battle with cancer with the full support of the world’s most advanced medical system, yet millions of other Americans face similar battles without even minimal access to that system.

Low- and middle-income families are not the only ones who have been harmed by our inability to provide valued public services. For example, rich and poor alike would benefit from an expansion of the Energy Department’s program to secure stockpiles of nuclear materials that remain poorly guarded in the former Soviet Union. Instead, the Bush administration has cut this program, even as terrorists actively seek to acquire nuclear weaponry.

The rich are where the money is. Many top earners would willingly pay higher taxes for public services that promise high value. Yet trickle-down theory, which is supported neither by theory nor evidence, continues to stand in the way. This theory is ripe for abandonment.

Soak the rich! I'm pretty much an Unreconstructed Keynesian so I'm waiting for those ideas to come back into vogue. Seriously, a stronger America requires a progressive tax code. Peace ... or War!

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