The Tribune Democrat, Johnstown, PA

March 28, 2013

Jim Scofield | Tax on wealthy, not national debt, is real issue

Jim Scofield

— The political conflict in the United States isn’t really about the national debt, but about lowering even further our historically low tax rates on wealth (top income tax rates were 70 percent to 50 percent during 1980s) and undercutting the New Deal programs, for example Social Security and unemployment insurance, and the 1960s’ Medicare and Medicaid programs, all under the pretense the United States can’t afford them.

In the midst of this, wealth has shifted drastically to the top 1 percent. They now have 20 percent of income, up from 10 percent in 1980 (Economic Policy Institute).

Wages, on the other hand, have stagnated or even fallen in the past four decades, while work hours per year have risen. Minimum wages are way lower. And retirement incomes are being cut back.

The Republicans were never about actually lowering the national debt and balancing the budget. The past three Republican administrations drove the debt higher while hypocritically talking balanced budgets. The different versions of the recently passed Paul Ryan-sponsored Republican House budgets promise to balance budgets 10 years from now, without telling us specifically where large parts of the savings would come from.

Top tax rates for the wealthy and corporations would be lowered, effectively increasing the debt. Of course, Ryan proposes cutting social programs such as Medicare, Medicaid, the new Affordable Care Act program, food stamps and others. We see who they are concerned about.

That’s the point, lower taxes on the wealthy and undercutting social programs. In Wisconsin, Michigan, Indiana, Ohio and other states where Republicans control the legislatures, they have passed laws to weaken unions, the workers’ main support for wages and benefits.

Employee unions, the one force on the side of the employed, have been diminishing in recent decades anyway, because of the weak laws protecting those who wish to join.

Wages also have been jeopardized by American corporations shipping jobs to subsidiaries and subcontractors in countries such as Bangladesh and China, where wages can be as low as 30 to 50 cents per hour.

American free trade agreements don’t protect labor, just capital, and our foreign policy often colludes with such exploitive nations.

Wages are falling in many industries, such as auto, and  the U.S. government, which froze wages for two years, is now granting a minute 0.5 percent raise in April (a cost-of-living loss). The minimum wage, at $7.25 an hour, has fallen from its 1968-equivalent level of $10.50. (In France, it’s currently $12.70.)

This means that even those earning over the current minimum have been held down, too. If worker pay had been increasing along with our country’s productivity – as it did for the decades after World War II – the minimum would now be $18.70.

Low-wage occupations and low-wage jobs are increasing due to the recession, according to Bill Findley (The Tribune-Democrat, Jan. 13). New hires, including some college graduates, and the unemployed “are eager to snap up jobs at any wage.”

In contrast, the incomes at the top have risen many times in the past few decades. The pay of CEOs, Wall Street bankers and corporate executives is numerous times what it was three decades back. 

Corporate profits are way up, as is the stock market, but corporate hiring is down. Low pay at the bottom end fuels high profits and pay at the top. In the era after World War II, this wasn’t so, but it is now. In that respect, slavery  – no pay – helped earlier capitalists in the South and even in the North accumulate their estates, and undercut paid wages – a sad lesson.

The 40-hour week, which we have maintained for the past 70 years after a huge struggle to gain it, hasn’t decreased since. But productivity per worker has increased greatly. Shorter work weeks create more jobs and less unemployment.

Full employment, hated by management, forces higher pay for workers. In fact, though, economists such as Juliet Schor show that people in the United States are currently working more hours per year than previously. 

Many workers lack sick pay, often lack vacation pay (Germany mandates five weeks) and paid family leaves.

The attack on our social programs’ earned benefits as unaffordable may be succeeding. Even Democrats, perhaps President Obama, may be willing  to cut Social Security and Medicare in response to the scare of “the debt crisis.” 

We should have rejected  the Herbert Hoover mistake in the Depression: Cut government spending. That process just leads to more recession and fewer jobs.

The New Deal response to the Great Depression brought us important advances for most people. Conservative Republicans want to seize control of this debate to cut back those advances.

 

Jim Scofield of Richland Township is an associate professor emeritus at Pitt-Johnstown.

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