All across the country, states are facing budget crises and are looking to fix the situation. However, the focus of many of the “fixes” is to attack public sector unions and erode labor rights in general. The justification is that public sector workers supposedly have inflated benefit packages, and they must finally “pay their fair share.” In reality, this is hogwash. It is nothing more than an excuse to bust unions, rollback social safety nets, all while giving tax cuts to the rich. On the Rachel Maddow Show, Naomi Klein brilliantly describes what is really going on. The recent massive demonstrations in Wisconsin, and the threat of a general strike by some labor leaders, show that this time workers aren’t necessarily going to sit back and take the beating.
Most of the ant-union bills are happening under Republican governors. But working people are under attack, under the pretext of addressing a fiscal crisis, even under the reign Democratic local governments. In Providence, RI, for example, a labor-backed mayor recently handed all of the public school teachers pink slips. This was to prepare for firings and school closings that are said to be imminent and necessary to address the deficit. I just wrote something on the situation.
I propose one “fix” that would both help solve some of these economic woes and be fair. It focuses on going after those who bask in great wealth even during the economic crisis that they caused. We need to raise taxes on corporations and the rich. We need to collect the taxes that they owe and close the loopholes that allow them to shield money from taxes. The reality is that many corporations pay little to no taxes, and the rich pay taxes almost a third lower than they did in the 1950s—a time of great economic growth.
Yes, taxes need to be cut. We need to extend the tax cuts for the bottom 80% of the population–I would even settle for extending them for the bottom 95%. However, the top percentiles’ taxes need to be increased, so here are a few reasons why we should raise (and collect!) taxes on the rich, not cut them.
First, history shows that they can handle it. In the golden age of capitalism–a time where GDP growth rates vastly outpaced those of the last 30 years–the top tax brackets paid taxes as high as 94% of their income. High rates lasted up until as late as the early 1970s, with them paying 70%.
Second, it is good for the economy and the budget. It provides government income that can be used to provided vital services to the working class–like unemployment benefits, subsidized housing and healthcare, increasing the minimum wage, etc.–as well as be a source of funding for infrastructure spending–which we need badly, especially in addressing the ecological crisis. Both of these things stimulate the economy and provide jobs. Providing the social services reducing inequality and decreases the chances of economic meltdown. It also puts more dispensable income in the hands of people who will spend it, increasing demand and stimulating the economy. Infrastructure spending will directly create jobs–that’s an easy one.
Third, tax cuts for the wealthy do not create jobs at the level we need, if any at all. Wealthy people do not put their money into the economy the same way that working class and middle income people do. They are more likely to save it or sit on it to wait for more profitable times in the market. For example, reports came out recently stating that non-financial companies are sitting on over a TRILLION DOLLARS. Yet, they are not hiring people. This is because they don’t have confidence in the market. They don’t think they’ll make the profits the want. Here’s the link to the article.
What we need is a high road, wage-led growth, not low road, profit-led growth. The latter is what we’ve had since the 70s–the neoliberal era. This can be done in the short term by providing adequate fiscal stimulus–much, much, larger than has already been provided–and taxing the wealthy and cutting wasteful spending can pay for it (a few wars come to mind). Also, the government needs to have a more active role in creating jobs through infrastructure spending, etc. Trickle-down economics just doesn’t work.
But here’s the catch. It is going to be difficult to for anything to happen on the federal level in the next two years. We couldn’t get meaningful economic legislation passed under a Democratic majority, never mind under a Republican controlled house. We need to consolidate our forces on the ground and build so we can pressure for change from below now, as well as get some people elected in 2012. This does not, however, suggest extending tax cuts for the wealthy and cutting spending on social programs becomes the only option. That will only exacerbate the crisis even more. We need to buckle down and make sure that they DON”T get extended, that labor rights are not taken away, that teachers don’t get fired, and defend all of the other programs that are good–like social security. Also, there is room for us to wage battles on the state level. If we show our power in the streets, as they have done in Wisconsin, we can make them listen to us. A state-wide or nation-wide general strike certainly would shift some power to our hands.
The first step is to break away from the narrative that says solving the economic crisis “will require shared sacrifice across our community,” to quote Providence, RI’s Mayor Taveras. Working people are always sacrificing. It’s time for those who caused the current crisis—and for those who benefit from the perpetual crisis working people face laboring under an oppressive system like capitalism—to pay. Let’s draw a line in the sand and pick sides. Which side will you choose?
John Cronan Jr is a restaurant worker, organizer, and a masters student at the Murphy Institute for Worker Education and Labor Studies. Currently, he is a volunteer organizer for the Restaurant Opportunities Center of New York (ROC-NY). John is also an avid Boston sports fan.