The essential Robert Reich has nailed the current crisis brilliantly:
“The Republican strategy is to split the vast middle and working class – pitting unionized workers against non-unionized, public-sector workers against non-public, older workers within sight of Medicare and Social Security against younger workers who don’t believe these programs will be there for them, and the poor against the working middle class. By splitting working America along these lines, Republicans want Americans to believe that we can no longer afford to do what we need to do as a nation. They hope to deflect attention from the increasing share of total income and wealth going to the richest 1 percent while the jobs and wages of everyone else languish. . . . The strategy has three parts.
The first is being played out in the budget battle in Washington. As they raise the alarm over deficit spending and simultaneously squeeze popular middle-class programs, Republicans want the majority of the American public to view it all as a giant zero-sum game among average Americans that some will have to lose. . . .In the coming showdown over Medicare and Social Security, House budget chair Paul Ryan will push a voucher system for Medicare and a partly-privatized plan for Social Security – both designed to attract younger middle-class voters.
The second part of the Republican strategy is being played out on the state level where public employees are being blamed for state budget crises. Unions didn’t cause these budget crises — state revenues dropped because of the Great Recession — but Republicans view them as opportunities to gut public employee unions, starting with teachers. . . .Bargaining rights for public employees haven’t caused state deficits to explode. Some states that deny their employees bargaining rights, such as Nevada, North Carolina, and Arizona, are running big deficits of over 30 percent of spending. Many states that give employees bargaining rights — Massachusetts, New Mexico, and Montana — have small deficits of less than 10 percent. Republicans would rather go after teachers and other public employees than have us look at the pay of Wall Street traders, private-equity managers, and heads of hedge funds – many of whom wouldn’t have their jobs today were it not for the giant taxpayer-supported bailout, and most of whose lending and investing practices were the proximate cause of the Great Depression to begin with.
Last year, America’s top thirteen hedge-fund managers earned an average of $1 billion each. One of them took home $5 billion. Much of their income is taxed as capital gains – at 15 percent – due to a tax loophole that Republican members of Congress have steadfastly guarded. If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers. Who is more valuable to our society – thirteen hedge-fund managers or 300,000 teachers? Let’s make the question even simpler. Who is more valuable: One hedge fund manager or one teacher?
The third part of the Republican strategy is being played out in the Supreme Court. It has politicized the Court more than at any time in recent memory.
Last year a majority of the justices determined that corporations have a right under the First Amendment to provide unlimited amounts of money to political candidates. Citizens United vs. the Federal Election Commission is among the most patently political and legally grotesque decisions of our highest court – ranking right up there with Bush vs. Gore and Dred Scott. Among those who voted in the affirmative were Clarence Thomas and Antonin Scalia. Both have become active strategists in the Republican party.. . .
These three aspects of the Republican strategy – a federal budget battle to shrink government, focused on programs the vast middle class depends on; state efforts to undermine public employees, whom the middle class depends on; and a Supreme Court dedicated to bending the Constitution to enlarge and entrench the political power of the wealthy – fit perfectly together. They pit average working Americans against one another, distract attention from the almost unprecedented concentration of wealth and power at the top, and conceal Republican plans to further enlarge and entrench that wealth and power.
What is the Democratic strategy to counter this and reclaim America for the rest of us?”
Excellent question, Professor!
For the past eight years, I have been an employee at a public university. While I and my colleagues have been paying in our eight percent per year into our pension plans, the State of Illinois has failed to put in its annual eight percent. Furthermore, the previous governors routinely borrowed money from the pension fund to pay for the state’s operating budget. As a result, the pensions are now underfunded. In addition, we are not allowed to participate in social security. Yet no one seems to bring these facts up when they criticize government employee pension plans.
I had no idea your pension plan was being kicked aorund like that. I wonder how widespread such practices are.
Unfortunately Reich’s calculations are off by a factor of at least ten. The maximum income tax bracket is 44.6% which is 29.6% above 15%. Thirteen billion dollars taxed at 29.6% equals $3.848 billion and that divided by 300,000 teachers is only $12,826 per teacher – which does not cover salary and benefits by any stretch.
“If the earnings of those thirteen hedge-fund managers were taxed as ordinary income, the revenues generated would pay the salaries and benefits of 300,000 teachers.”