The Democratic Party— Brain Dead And Craven
The lead story in the November 11 New York Times was about a Democratic Party whine. The party has been losing the support of working people because these people’s incomes have not been rising fast enough in recent years to allow them to live more comfortably or more securely. And the solutions offered to ameliorate this situation by Democratic Party thinkers — ideas like better education and infrastructure investment—while good in themselves, offer no direct or near-term potential to make big and meaningful improvements in wages for most workers.
Alas, runs the whine of the Democratic Party’s best and brightest, it’s not their fault because there is no silver bullet here. No quick way to close the growing income inequality gap.
Well of course there is a silver bullet. Here it is: Raise the top income tax rate on both earned and unearned incomes from its present 39.6 percent to 45 percent and use all the revenue generated, ALL OF IT, to reduce the bottom income tax rate from 10 percent to 5 percent.
That’s it. The silver bullet. And here’s what it would (and would not) do:
–It would NOT be a tax increase because no additional money goes into government coffers. It would just be a tax shift that would tax more the presently under-taxed rich, and tax less all other presently over- taxed working Americans.
–It would stop giving an unearned tax preference to people who do not work for their money at the expense of those who actually earn their livings by working for it.
–It would directly, immediately, and meaningfully reduce income inequality.
–It would immediately and directly put money into the hands of the 70 percent of Americans whose spending animates the economy. The working poor would feel the largest benefit, but because of the way the tax system is structured, everyone earning roughly $200,000 or less would immediately have more net income, income in their pockets, spending money. The economy would immediately boom in consequence.
–It would reduce government spending and in fact the size of government because fewer Americans would need government aid for things like food stamps because they would be keeping more of what they earn working.
–And this is critical: It would INCREASE real productive investment. This is because investment gravitates to where investors can make the most profit. These days, they can’t make it in investments in goods and services producing realms because most potential customers in these realms don’t have a lot of money to spend. So the investments go into bubble investments like derivatives and the stock market where profits tend overwhelming to benefit only the rich.
That’s the silver bullet. Simple, easy to understand by voters, obviously working to their own interests. So why haven’t the Democrats made this or something very like this their basic economic campaign issue?
Three reasons: The puffed up, over-priced academics and consultants who create their issues veer away from the obvious; party leaders these days fear introducing any such ideas that might offend their biggest campaign contributors; and perhaps most important, Democrats these days suffer from the political equivalent of beaten wife syndrome—a craven inability to directly challenge the conservative economic agenda. It’s a kind of thinking that does not begin with the notion that an idea is the best idea for the most people, but rather that all ideas put forward must be made within the context of what Republicans might deign to Republicans accept if shaped in ways that don’t go too strongly against Republicans’own preferences?
Within this craven and cowed context, would Republicans back the above proposal? Of course not! They would hate it. That’s the point!
That’s why it’s a campaign issue. Because it clearly sets one party’s views against the other party’s, giving voters something they don’t have today. A clear choice. This is supposed to be what elections are all about in this country. Something the present Democratic Party, Wall Street friendly and rich guys beard, has obviously forgotten.
So who need the Democratic Party? I don’t. The country doesn’t.
We need a new Middle Class Party. One that replaces the Democratic Party the way the Republicans replaced the Whigs all those years ago.
So where is this new party? Waiting. Waiting. Waiting….
mike@wallstreetpoet.com
Wall Street Poet Blog 