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Reasoning? What Reasoning?

By       Message Stephen Pizzo       (Page 1 of 2 pages)     Permalink

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Have we forgotten how to reason? Or has what we take for reasoning actually become a form of marketing?

That's the question that came to mind this morning as I thought about the whole debate about tax policy and the rich. At hand is the decision whether or not to extend the Bush tax cuts for the rich or pare them back.

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Those who want to retain those tax breaks -- those who get them -- employ the following reasoning to support their position:

If we tax the rich we are taking away money from the very people who invest in business enterprises, startups and, thereby create jobs, they'll stop doing so. Why take money away from those job creating machines just to give it to the government, which doesn't create private sector jobs? And at this moment, when we so desperately need job creation?

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That's their story and they're sticking to it. But there you are, that's their "reasoning," and they want us to accept it at face value.

But it's nonsensical on its face. I mean, we gave the rich $1.6 trillion in extra dough over the past decade and what did they do with it? Rather than create jobs the companies they owned, the ones they purchased with their extra money, and the ones they started up, boosted profits by shipping existing US jobs to cheap offshore venues. And with the dough left over, they provided fuel for the Wall Street derivatives bubble that later cost additional millions of their workers their jobs and ordinary investors got to watch their meager nest eggs become significantly more meager.

Oh, and while the American worker was down, out of work, and their labor unions neutered, those companies owned by these rich "job creators" took the opportunity to renege on pensions their workers had been paying into for their retirements. The "reasoning" then will sound familiar: if these companies were saddled with all those pension obligations they would not be able to compete in the a globalized economy. Then they'd go bankrupt and all those workers would lose their jobs. So, welching on those pensions was, by their "reasoning," a way to save jobs. Making them pay would be a way to "destroy jobs."

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You know, the old "One move and the sheriff gets it." ploy

Now it's not that the reasoning in an of itself was faulty. Not at all. It worked perfectly, for them. Not so much for the other 98% of us.

The wealth of the top 2% jumped more than 10% since the Bush tax cuts went into effect.

A 2009 report by University of California, Berkeley economics professor Emmanuel Saez concludes that income inequality in the United States is at an all-time high, surpassing even levels seen during the Great Depression. The paper, which covers data through 2007, points to a staggering, unprecedented disparity in American incomes. On his blog, Nobel prize-winning economist and New York Times columnist Paul Krugman called the numbers "truly amazing."

The report shows that:

  • Income inequality is worse than it has been since at least 1917.
  • The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007
  • In the economic expansion of 2002-2007, the top 1 percent captured two thirds of income growth.
  • The average wage of Americans, adjusting for inflation, is lower than it was in the 1970s.
  • The minimum wage, adjusting for inflation, is lower than it was in the 1950s.
  • On the other hand, billionaires have never had it better.

So, as I said, their "reasoning" was spot on -- for them. Now let's look at how giving them that extra $1.6 trillion in tax cuts worked for the rest of us. This from the US Census Bureau:

"The U.S. Census Bureau announced today that real median household income in the United States fell 3.6 percent between 2007 and 2008, from $52,163 to $50,303. This breaks a string of three years of annual income increases.... The nation's official poverty rate in 2008 was 13.2 percent, up from 12.5 percent in 2007. There were 39.8 million people in poverty in 2008, up from 37.3 million in 2007.

Meanwhile, the number of people without health insurance coverage rose from 45.7 million in 2007 to 46.3 million in 2008, while the percentage remained unchanged at 15.4 percent.

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Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a (more...)
 

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