Republicans aren’t going to tell Americans the real cause of our $31.4tn debt
Robert Reich
What’s that then Bobby?
Not only is the Republican story false, but it leaves out the bigger and more important story behind today’s federal debt: the switch by America’s wealthy over the last half century from paying taxes to the government to lending the government money.
This backstory needs to be told if Americans are to understand what’s really happened and what needs to be done about it. Republicans won’t tell it, so Democrats (starting with Joe Biden) must.
A half century ago, American’s wealthy helped finance the federal government mainly through their tax payments.
Tax rates on the wealthy were high. Under Republican president Dwight Eisenhower, they were over 90%. Even after all tax deductions, the wealthy typically paid half of their incomes in taxes.
Wealthy and income taxes – moron, that’s on income, not wealth. But:
The portion of GDP paid as tax is not at a low. In fact, it’s at a high. Therefore deficits – which are what lead to debt – is not caused by a lack of tax revenue. It’s caused by incontinent spending.
The hike in income tax was to pay for the war and let’s face it, the Americans have been paying for wars – whether their own or their clients’ – ever since.
I seem to recall that irrespective of headline tax rates, the US collected +/- 19% of GDP in taxes during the post-war period. The graph Tim published kinda shows that (maybe a little less), but certainly nothing outrageous.
You can barely notice the Kennedy Tax cuts which were delivered in 1964/65 as part of Johnson’s pledge to deliver Kennedy’s program post-mortem.
Why is this? Maybe as the most complicated tax statutes in the world, headline tax rates, whether high or low, are a very small part of the picture and the ever growing size of major corporates with their special pleading, lobbying and offshoring of profits has meant they retained more of their profits than headline rates suggest.
I seem to recall that irrespective of headline tax rates, the US collected +/- 19% of GDP in taxes during the post-war period.
Anthony Davies, economics and statistics prof, has made that point a few times on the excellent Words and Numbers podcast. He claims to have done the calculations to check and he gives the same reasons you give.
Good lord that bloke is an idiot. I wonder if he ever gets tired of being wrong about everything?
“I wonder if he ever gets tired of being wrong about everything?”
Why? He’s still making lots of money and getting lots of attention, so why change?
“Good lord that bloke is an idiot.”
Is he, though? I often wonder whether hogwash like this is driven by stupidity or malice. Are these people too dim to understand that, as JG says, revenue’s basically the same as it’s been for the last 70 years, or do they just hate those more productive than themselves?
(In support of the latter, I’m reminded of Lord Reith, who bore a grudge against John Logie Baird going back to their days at technical college. Reith was a well-connected son of the manse. How dare this upstart come along and steal the limelight from him through mere talent? And then have the audacity to amass a fortune by selling socks? He’d soon put him in his place…)
Is he looking at solving govt debt by Knights Templaring the lenders?