Really, David Stockman?

August 2, 2010

David Stockman, Ronald Reagan’s budget chief, attacked Republicans in the NYTimes today. Does he really think the U.S. economy would be better today if the top marginal income tax rate was still 70 percent and the tax code left unindexed for inflation? Then there’s this bit:

By fiscal year 2009, the tax-cutters had reduced federal revenues to 15 percent of gross domestic product, lower than they had been since the 1940s.

Now let’s see, was there anything else happening in 2009 that might have had some impact on tax revenues? I seem to remember something. Now what was it. Oh yeah, it was this:

gdpchart2

gdpchart

2 comments

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Really, James Pethokoukis? Your charts accurately point out that as the recession took hold in 2007, employers slashed their workforces. The nation may have emerged from the recession by Q4 of 2009, but this period of economic recovery has seen the most lopsided gains in corporate profits relative to real wages and salaries in our history. Worker productivity has increased dramatically, but the workers themselves have seen no gains from their increased production. It has all gone to corporate profits.

Having taken everything for themselves, corporations are so awash in cash they don’t know what to do with it all. In July, cash at the nation’s nonfinancial corporations stood at $1.84 trillion, a 27% increase over 2007(Bloomberg). As a percent of total company assets, cash has reached a level not seen in the past half-century Moody’s).

Charles D. McLane Jr. is the chief financial officer of Alcoa, which recently experienced a turnaround in profits and a 22 percent increase in revenue. Mr. McLane assured investors that his company was in no hurry to bring back 37,000 workers who were let go since 2008. The plan is to minimize rehires wherever possible, he said, adding, “We’re not only holding head-count levels, but are also driving restructuring this quarter that will result in further reductions”(New York Times).

The wealthy are always demanding tax cuts is “because we create jobs.” Uh, sorry, pal. When you’re the only people left with cash, there’s no one else left to tax.

Posted by Yellow105 | Report as abusive

I hate to say it Mr. Pethokoukis but your nothing more than a Republican corporate hack who is often wrong in his analysis. You must be a charter member of the Glenn Beck/Rush Limbaugh club.

Posted by csodak | Report as abusive