Thursday, December 16, 2010

Bob & Me

Did you know that one of my best friends is Robert Reich, the brilliant economist who served as Secretary of Labor during Bill Clinton's first term?

Actually that's not true. I've never met the man in my life, alt
hough I do read his blog regularly.

However, when I decided to send him an e-mail with a hypothetical economic question to pass the time as I waged my nightly battle with insomnia, he and I managed to strike up a voluminous correspondence that continues to this day.

Okay, that's also a whopper. I sent him one letter and he responded with a single sentence.

But WHAT a sentence!

First, my letter:

Dear Mr. Reich,

This set of questions may seem silly, but I'm asking mainly out of academic curiosity.

Let us pretend that the top marginal tax rate in this country was restored to the levels
imposed by John Kennedy (i.e., 70%, who actually reduce them by more than 20% from what
they had been under his predecessor, Republican Dwight Eisenhower):

1) How much revenue would that bring to the federal government annually?

2) Assuming that every cent obtained by the government this way was used for the sole
purpose of paying off our debt, how long would it take for the entire amount to be
wiped out?

Please bear in mind that I am not advocating this as a feasible policy proposal; I'm
merely curious as to how the math would work out if, in a hypothetical universe, this

Matthew Rozsa

Now his reply:

I estimate (1) $100 billion a year, (2) 30 years.

I don't blame him for not writing more, by the way. He's a thoughtful liberal trying to
light a candle of reason in an age of fatuous conservatism. That's not a task which
comes with easy work hours.

Besides, before you party poopers decide to minimize the significance of what he wrote
to me, let me ask you this:

When was the last time a former presidential cabinet member sent you an e-mail?

Yeah. I thought so.

Jocularity aside, though, there are some serious things that need to be said about what
Reich wrote:

1) Thirty years, though it may seem like a considerable amount of time, is not a
particularly lengthy duration in the larger scheme of history. It is well within the
lifetimes of most of the people who actually read this blog (all twenty of you), it is
roughly the same chronological span separating where we are today from the beginning of
Ronald Reagan's first term, and it is considerably less time than it took for America
to win the Cold War, pass meaningful civil rights legislation, or give Billy Joel
enough material to write the lyrics of "We Didn't Start the Fire."

It is, most importantly, definitely a short enough time period for deficit hawks (if
they were sincere in their avowed objectives, which incidentally they're not) to finally
take comfort in knowing that our government was paying off its debt at a pace reasonably
rapid enough to avoid fiscal calamity.

2) Taxing the wealthy at a rate of 70% is not socialistic. I know, I know, the howls of
protest which would erupt from plutocrats and their defenders in both parties (to say
nothing of the voters who have fallen prey to the chicest political notion in America
today - i.e., that their cause is really that of the rich and not those selfish
unemployed people) would be deafening. Nevertheless, the facts simply would not
substantiate their assertion - unless, of course, one argues that presidents like John
Kennedy and Richard Nixon presided over a socialist dominion, since the rate was 70%
under both of their presidencies. And if THEY led us through a socialist hellhole, then
the America governed by Ike "91%" Eisenhower must have been positively Soviet!

3) Taxing the wealthy at a rate of 70% will not automatically doom us to a stagnant
economy. Once again, I cite the prosperity of the 1950s (when Eisenhower was president)
and 1960s (when Kennedy and Johnson were in office) as examples. Indeed, if anything, a
cursory look at economic data shows that policies which do not place adequately high
taxes on the wealthy tend to correspond with bad times. Of course, Reagan's decimation
of our labor laws and the inevitable decline in middle-class purchasing power that
occurred as a result might have also played a role in that trend. Or it could have been
the passage of trade agreements that made it more profitable for companies to ship jobs
overseas than to keep them in the hands of Americans. Or perhaps it was the slashing of
important social welfare programs from the New Deal era that deprived millions of
Americans of the safety nets they needed... Oh what the hell. It's just easier to blame
it all on Obama, isn't it? And that totally has nothing to do with the fact that he's
our first black president.

4) We wouldn't even need to wait thirty years to pay off the debt. After all, there are
plenty of programs in Washington that could be reduced in size or even cut without
having dire consequences on the American middle class. What if we stopped wasting
trillions of dollars on military projects that seem to complicate our geopolitical
standing far more than they protect our national security interests(the Iraq war comes
to mind)? What if we decided that the hundreds of billions which are spent by federal
agencies to prosecute victimless crimes should be used for paying down our debt (I'm
looking at the drug wars now)?

Of course, cutting military spending and allowing people to legally smoke pot has never
happened in America. Well, except when Senator Harry Truman (later President Harry
Truman) identified and slashed hundreds of millions of dollars of fiscal waste in the
military during the early 1940s (you may recall that we were fighting a pretty big war
at that time too). And there was the entire period of American history that took place
before the early twentieth century, during which time marijuana was entirely legal.

But those points are way too "facty" and "logicy" in this era of Glenn Beck and Sarah
Palin. My apologies for being such a snob. Here, I'll make it up to you with a picture
of a dancing baby.

I'm probably not laughing as much as you, though. In part it's because that baby is just
creepy, but the bigger reason is that the consequences of our current predicament are
actually pretty dire. You see, our national debt actually IS dangerously high; our
unemployment rate is stuck at just under 10% (and that doesn't even account for people
who have stopped seeking work); health care is prohibitively expensive for all but the
most affluent among us; our education system, which alone can provide our children with
the tools they'll need to be economically competitive, continues to decline due to a
surplus of hackneyed ideas and a deficit of actual funding; and those Americans who are
lucky enough to actually have a job find themselves working longer hours in worsening
conditions for lower pay and with fewer means than ever for actually changing their
plight (such as joining a union without worrying about being fired, or being able to
quit their current job because a booming economy guarantees that they will eventually
find another one).

That's why I'd love it if the rich, who currently own the vast bulk of our nation's
wealth (the top 20% own 85%; the top 1% earn a staggering 34.6%) started being forced
to pay their fair share. As things stand right now, though, it looks like that's never
going to happen. Hell, the people with the loudest and proudest voices today are the
ones who refer to the working poor as "piglets" (Rush Limbaugh), suggest that hungry
children dumpster dive (Limbaugh again) or proudly claim that unemployment benefit
extensions are a "tragedy" on the same level as Pearl Harbor or dying of bone marrow
cancer (Christine O'Donnell produced that gem).

But hey, at least Robert Reich responded to my letter.

Sincerely... thanks Mr. Reich.

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