The Great Debate

“Tax relief is an achievement for families struggling to enter the middle class,” the president trumpeted, shortly after Congress, by sweeping bipartisan margins and after a bruising battle, had lowered taxes for almost all Americans.  “For hard-working lower income families, we have cut the bottom rate of federal income tax from 15 percent to 10 percent. We doubled the per-child tax credit to $1,000 and made it refundable. Tax relief is compassionate, and it is now on the way.”

Despite a furious counterattack from the opposition, the president had scored a major victory by securing lower tax rates for everyone in the middle class on down.

President Barack Obama last week after narrowly averting the fiscal cliff?  Nope, President George W. Bush in June 2001, signing the first set of his much-sought-after tax cuts. Perhaps the “compassionate” was a giveaway.

Now that the vast majority of those cuts — to income taxes, and to much of the estate levy and capital gains and dividend rates —have been made permanent, with a bipartisan Washington consensus hardening around the benefits of tax relief, Bush must surely be smiling in Texas — and for good reason.

Republicans have now succumbed to navel-gazing, infighting and worse. But they should instead focus on how their larger principles have prevailed.

A year ago Thursday in Osawatomie, Kansas, President Barack Obama delivered a fiery defense of the middle class. It marked a turning point in the president’s economic argument — and helped him win reelection, despite historic economic headwinds.

“This is a make-or-break moment for the middle class,” Obama told the crowd, hundreds of whom had lined up overnight in frigid conditions.

The middle class faces another make-or-break moment in the intensifying fiscal showdown. If congressional Republicans deny tax relief for 98 percent of Americans to preserve a tax windfall for the top 2 percent, then the failed dogma of trickle-down economics has won again — despite being pummeled in the election last month.

The focus in Washington has now shifted to the fiscal cliff, with the White House and Congress, particularly the House Republicans, staking out negotiating positions on the expiring Bush tax cuts and the looming budget sequester.

The White House’s firm opening salvo—and House Speaker John Boehner’s grudging admission that he is “open” to a budget deal that contains new revenue—have been much discussed. With six in 10 Americans expressing support for higher taxes in exit polls on Nov. 6, President Barack Obama’s position is a strong one.

It’s important to remember, however, that the public came out on Election Day in support of more than Obama’s tax stance. Exit polls and public-opinion surveys show that the president’s mandate goes far beyond taxes and the fiscal cliff.

The following is an excerpt from a speech Alan Krueger, chairman of President Obama’s Council of Economic Advisers, gave at the Center for American Progress on Thursday. The full text is available here.

Although I have done much research on inequality, I used to have an aversion to using the term. Indeed, the Wall Street Journal ran an article in the mid-1990s that noted that I prefer to use the term “dispersion.” But the rise in income dispersion – along so many dimensions – has gotten to be so high, that I now think that inequality is a more appropriate term.

President Obama summarized the rise of inequality very succinctly in his Osawatomie, Kansas speech, when he said, “over the last few decades, the rungs on the ladder of opportunity have grown farther and farther apart, and the middle class has shrunk.”

MILWAUKEE -- As Washington and Madison fiddle, this city’s middle class is in slow free fall.

First, the numbers. From 1970 to 2007, the percentage of families in the Milwaukee metropolitan area that were middle class declined from 37 to 24 percent, according to a new analysis by the Southeastern Wisconsin Regional Planning Commission.

(Click on the photo above for a slideshow) During the same period, the proportion of affluent families grew from 22 to 27 percent--while the percentage of poor households swelled from 23 to 31 percent. In short, Milwaukee's middle class families went from a plurality to its smallest minority. 

By Gerald W. McEntee
The views expressed are his own.

The voters of Ohio sent a clear message on Tuesday.  They overwhelmingly defeated Gov. John Kasich’s radical attempt to end collective bargaining for public employees in Ohio and brought an end to one of the most flagrant “bait and switch” efforts seen in recent American history.

Last November, voters in states such as Florida, Ohio, Maine, Michigan and Wisconsin elected governors and legislators who campaigned on the issue of jobs.  Yet in state after state, and in the nation’s capitol as well, these newly elected politicians launched an unprecedented assault on the basic rights of working Americans.  Instead of creating jobs, they sought to eliminate public sector collective bargaining, restrict the rights of citizens to vote, provide unneeded tax cuts to the wealthy, privatize vital services and promote public employee layoffs.  All of these efforts were designed more to reward their Wall Street-backed campaign donors than to serve the public who had every reason to expect that the focus would be on jobs.

Ohio and Wisconsin were the breeding grounds of these anti-worker campaigns.  Newly elected governors Scott Walker and John Kasich both rejected federal high-speed rail funds that cost their states tens of thousands of new jobs.  Both put through unwise tax cuts for the wealthiest businesses and individuals in their states and then sought draconian cuts in services to make up the difference in lost revenue.  Both signed highly restrictive voting laws, designed to keep seniors, minorities and students from participating in the political process.  And both targeted public employees and the rights of workers to collectively bargain for wages, working conditions and safety on the job.  They claimed these changes were needed to promote economic growth, but voters rightly saw the proposals as small-minded efforts to silence workers and reward the Wall Street backers who bankroll political campaigns.

She commuted to the protests, she said, while holding down two part-time jobs. She lived at home and helped her schoolteacher mother, who also worked two jobs, support her jobless, 60-year-old father. She asked to be identified only by her middle name – Susan – because she feared her bosses would fire her for attending protests. She didn’t talk of revolution. She talked of correction.

“Like any great nation and country, there are also hitches in the plan,” she told me. “And things that need to be changed.”