Getting It Wrong As Usual
by Charles Lemos, Mon Oct 05, 2009 at 02:03:36 PM EDT
Once again Ross Douhat is wrong as usual. In a column entitled Inequality As Usual in the New York Times, Mr. Douhat seeks to divert attention from the causes of social inequality and reassign culpability from its conservative progenitors to liberalism for failing in nine short months to reverse a three decade assault on the middle class and the poor.
According to Mr. Douhat should the Obama Administration fail to reverse our still-widening social inequality, it "will represent a significant policy failure." Perhaps but I take issue with a number of Mr. Douhat's assertions. Only a deluded conservative could claim that the federal income tax is already quite progressive. Quite the opposite. In 1948, still at the start of our "Great Compression", the effective Federal Tax Rate (Income Tax + FICA) for median families stood at 5.30 percent while the effective Federal Tax Rate on the richest one percent was 76.9 percent. Even as late as 1980, the effective Federal Tax Rate for median families was 23.68 percent versus 31.7 percent for the top percent. By 1985, Reagan's tax cuts narrowed that margin to just 46 basis points, 24.44 percent on median families versus 24.9 percent on the richest one percent. While real income for the bottom 90 percent of the population fell by 11 percent between 1973 and 2005, those in the top .01 percent bracket, comprising some 14,000 households with annual incomes averaging nearly $13 million, saw their take increase by 250 percent over the same period and yet they were gifted by the Bush Administration with unparalled tax cuts.
I'm also struck by the problem is too vexing so let's not fix it mentality of Mr. Douhat.
There's only so much that politicians can do about broad socioeconomic trends. The rise of a more unequal America is a vexingly complicated issue, whose roots may wind too deep for public policy to reach.
The zenith of fairness in America was the mid-1960s. That achievement was the fruit of the public policies that were enacted during the Administration of Franklin Roosevelt. The great reduction of inequality that undid the gross divide of the 1920s and created middle-class America between 1935 and 1945 was driven by political change that included the adoption of a progressive tax structure that enabled a larger government role in the economy and provided the basis for a broad range of redistributive programs. Mr. Douhat is simply wrong to suggest that there's only so much that politicians can do about social inequality. History proves otherwise.
On the other hand, we face problems that FDR did not have. One critical difference between then and now is that the Federal Government, thanks largely to 'limited government' GOP Administrations, is encumbered by over $11 trillion in debt. Much of that debt was accrued to pay for a defense build-up that ultimately was little more than a redistributive transfer of wealth to the arms industry. Or take the Bush-Cheney Energy Bill which provided $6 billion in direct subsidies to the oil & gas sector plus another $20 billion to $32 billion in indirect subsidies over 20 years. Our five-year $300 billion Farm Bill includes $15 billion in annual subsidies mostly to large agri-businesses such as Archer-Daniels-Midland and Cargill. Note that 75 percent of these subsidies go to a handful of commodities (mostly wheat, corn, and oilseeds) used as food additives, making highly processed junk food cheap while fruits and vegetables and whole foods currently get almost no aid. Nearly 70 percent of farm subsidies go to the top 10 percent of the country's biggest growers while America loses one family farm every half an hour. There's socialism for the wealthy in this country. Conservatives just seem to want to gloss over that fact, perhaps because they are the beneficiaries.