So the really big fight -- perhaps the defining battle of 2012 -- won't be over Medicare. It won't even be over Obama's jobs program.
It will be over whether the rich should pay more taxes.
The president has vowed to veto any plan to tame the debt that doesn't increase taxes on the rich. The Republicans have vowed to oppose any tax increases on the rich.
It's a good fight to have.
In a Rose Garden ceremony this morning, Obama proposed new taxes on the wealthy -- including a special new tax for millionaires, the closing of loopholes and deductions for people making more than $250,000 a year, and an end to the portion of the Bush tax cut going to higher incomes.
Republicans accuse the president of instigating "class warfare." But it's not warfare to demand the rich pay their fair share of taxes to bring down America's long-term debt.
After all, the richest 1 percent of Americans now takes home more than 20 percent of total income. That's the highest share going to the top 1 percent in almost 90 years.
And they now pay at the lowest tax rates in half a century -- half the rate they paid on ordinary income prior to 1981.
(Unfortunately, the President isn't proposing to raise the capital-gains tax -- which, now at 15 percent, creates a loophole large enough for the super-rich to drive their Ferrari's through. About 80 percent of the income of America's richest 400 comes in the form of capital gains. Here's where billionaire hedge-fund and private-equity fund managers make out like bandits. As I've noted, I also wish he aimed higher -- for more brackets and higher rates at the very top. But at least he's drawn a line in the sand. The veto message is clear.)
Anyone who says the American economy suffers when the rich pay more in taxes doesn't know history. We grew faster the first three decades after World War II than we have since.
Trickle-down economics has been a cruel joke.
On the other hand -- given projected budget deficits -- if the rich don't pay their fair share, the rest of us will have to bear more of a burden. And that burden inevitably will come in the form of either higher taxes or fewer public services.
If anyone's declared class warfare it's the people who inhabit the top rungs of big corporations and Wall Street (and who comprise a disproportionate number of America's super rich). They've declared it on average workers.
The ratio of corporate profits to wages is higher than it's been since before the Great Depression. And even as corporate salaries and perks keep rising, the median wage keeping dropping, and jobs continue to be shed.
You've got the chairman of Merck taking home $17.9 million last year. This year Merck announces plans to boot 13,000 workers. The CEO of Bank of America takes in $10 million, and the bank announces it's firing 30,000 workers.
Maybe I'm old-fashioned, but the way I see it we've got a huge budget deficit and a giant jobs problem. And under these circumstances it seems to me people at the top who have never had it so good should sacrifice a bit more, so the rest of us don't have to sacrifice quite as much.
According to the polls, most Americans agree.
Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.
Five Things To Know About Obama's Deficit Plan
President Obama this morning outlines a deficit-reduction plan that his economists say would reduce anticipated federal budget deficits by about $4 trillion over the next decade.
As NPR's Scott Horsley said earlier today on Morning Edition, the president and his aides will make the case that he's put together a "balanced" plan of cuts in expected spending and increases in tax revenues. "Balanced," says Scott, is a code word for a plan that includes tax increases — in this case, on the wealthy.
The president is due to officially unveil the plan at 10:30 a.m. ET.
As we wait for him to speak, here are five things to know about what he's going to propose:
1 — Which Is It? $4 Trillion Or $3 Trillion? As they report about what the president's going to say, some news outlets are saying the president will have a plan for saving $4 trillion over the next decade, while others are saying it's a $3 trillion package.
Which is it?
Both (sort of).
Officially, the president's statement will be about what he's recommending to the Joint Committee on Deficit Reduction — the bi-partisan "super committee" of senators and representatives. It's been charged with finding $1.2 trillion in additional budget savings (above the $1 trillion agreed to last month) over the next decade.
As Scott reported, most economists say that $1.2 trillion just isn't enough to make serious progress toward getting the government's accounts in order. So, the president is going to pitch a plan that he says includes and expands on the $1 trillion that's already been agreed to, and adds up to just more than $4 trillion.
2 — Increased Tax Revenues (Translation: Higher Taxes) Account For About Half: If you look at the $3 trillion in projected deficit reduction that the president says his plan would achieve over the next decade (above and beyond the $1 trillion already agreed to), then about $1.5 trillion is expected to come from higher taxes. The president proposes:
4 — The Cuts: According to senior administration officials, the AP says, the plan includes "nearly $250 billion in reductions in Medicare spending, $330 billion in cuts in other mandatory benefit programs, and savings of $1 trillion from the withdrawal of troops from Iraq and Afghanistan."
5 — Its Chances: Lawmakers just went through a bruising political battle over the deficit and the government nearly went into default as they argued over what to do. What are the chances that this plan — something of a "grand bargain" that could anger liberals and conservatives — will fare any better?
"If the left digs in and says you can't touch Medicare" and other entitlement programs and "the right digs in and says you can't raise taxes ... it's going to be a long and unproductive 14 months" between now and the November 2012 elections, Scott says.
Jim Watson/AFP/Getty Images President Obama last week.
The president is due to officially unveil the plan at 10:30 a.m. ET.
As we wait for him to speak, here are five things to know about what he's going to propose:
1 — Which Is It? $4 Trillion Or $3 Trillion? As they report about what the president's going to say, some news outlets are saying the president will have a plan for saving $4 trillion over the next decade, while others are saying it's a $3 trillion package.
Which is it?
Both (sort of).
Officially, the president's statement will be about what he's recommending to the Joint Committee on Deficit Reduction — the bi-partisan "super committee" of senators and representatives. It's been charged with finding $1.2 trillion in additional budget savings (above the $1 trillion agreed to last month) over the next decade.
As Scott reported, most economists say that $1.2 trillion just isn't enough to make serious progress toward getting the government's accounts in order. So, the president is going to pitch a plan that he says includes and expands on the $1 trillion that's already been agreed to, and adds up to just more than $4 trillion.
2 — Increased Tax Revenues (Translation: Higher Taxes) Account For About Half: If you look at the $3 trillion in projected deficit reduction that the president says his plan would achieve over the next decade (above and beyond the $1 trillion already agreed to), then about $1.5 trillion is expected to come from higher taxes. The president proposes:
Repealing the so-called Bush tax cuts for couples making more than $250,000 a year.3 — What About "Entitlements?" "The plan includes no changes in Social Security and does not include an increase in the Medicare eligibility age, which the president had considered this summer," The Associated Press reports.
A "Buffett rule" that would, as Bloomberg News writes, "require taxpayers with [annual] incomes of $1 million or more pay at least the same percentage in taxes as middle-income Americans." It gets its name from billionaire investment whiz Warren Buffett, who has said he and other super-wealthy folks should pay more in taxes.
4 — The Cuts: According to senior administration officials, the AP says, the plan includes "nearly $250 billion in reductions in Medicare spending, $330 billion in cuts in other mandatory benefit programs, and savings of $1 trillion from the withdrawal of troops from Iraq and Afghanistan."
5 — Its Chances: Lawmakers just went through a bruising political battle over the deficit and the government nearly went into default as they argued over what to do. What are the chances that this plan — something of a "grand bargain" that could anger liberals and conservatives — will fare any better?
"If the left digs in and says you can't touch Medicare" and other entitlement programs and "the right digs in and says you can't raise taxes ... it's going to be a long and unproductive 14 months" between now and the November 2012 elections, Scott says.
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Obama To Propose $1.5 Trillion In New Tax Revenue Sept. 18, 2011
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