Stop calling it class warfare

Robert Reich

Kai Ryssdal: President Obama went to the United Nations today. In amongst his thoughts on the Israeli Palestinian question were some suggestions about the global economy: Urgent and coordinated action is what the White House wants.

As you know, the administration released its plan to cut the deficit earlier this week, which has brought us straight back to the same old narrative: taxes or spending cuts?

And that brings us to commentator Robert Reich.

Robert Reich: It is not "class warfare" to ask the rich to 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 90 years. And they now pay at the lowest tax rates in half a century.

Before 1981, the top marginal tax rate in America was more than 70 percent. And now it's half that, and besides, most of the very wealthy take their income in capital gains. And that's now taxed at 15 percent -- down from 35 percent as recently as the 1980s.

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 -- when taxes were higher -- than we have since.

And look: If the rich don't pay their fair share, the rest of us have to bear more of a burden. And that burden comes in the form of either higher taxes or fewer public services.

If anything, the people who have declared class warfare are those at the top of big corporations and Wall Street -- and 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.

I mean, you've got the chairman of Merck taking home $17.9 million last year. And then this year Merck announces plans to boot 13,000 workers. The CEO of Bank of America takes home $10 million, and the bank announces it's firing 30,000 workers.

Call me old-fashioned, but the way I see it, we've got a huge budget deficit and a huge 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 -- who haven't had it as bad in decades -- don't have to sacrifice quite as much.

Ryssdal: Robert Reich was secretary of labor for President Clinton. His most recent book is called "Aftershock: The Next Economy and America's Future." Next week, David Frum. Until then, your thoughts should you care to share them -- write to us.

About the author

Robert Reich is chancellor's professor of public policy at the University of California, Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton.
Log in to post44 Comments


To Seth L's comments: so you want the government's share of GDP to revert back to equal 1902?

Do we get rid of our Interstate highway system? Do we let people die on the streets rather than treat them in hospitals?
Do we allow people to die of lead paint poisoning? Allow car companies to build cars that kill people so they can make more profits? In 1910, over 2 million children under the age of 15 were working in the US. Are we ok with that too? Do we eliminate our military too? The US is still the world's largest exporter, and our military helps to make it safe. What about our public school system? I guess we'll have to get rid of that too....

We have not yet reached the point of embracing Karl Marx. Steering the United States without tweeking Capitalism here and there WILL result in eventual collapse. Then Karl and his friends will show up. You cannot keep cooking the golden goose and eating it all by yourself without sharing for too much longer....

It appears Mr. Reich needs a quick refresher in History and Mathematics....

Government revenue, as a % of GDP, was 7.03% in 1902. The federal share of that was a mere 2.71% of GDP; state revenue 0.76%; and local government revenue 3.56%.

Karl Marx is usually credited with this term in the late 1800's, although "class warfare" does not specifically appear in any of his texts.

As a result of "class warfare", the federal income tax became law in 1913. The "less fortunate" citizens were deceived and convinced that taxing the wealthy would solve their problems. By 1921 total government revenue was 14.6% of GDP and the federal share was 8.4% of GDP! Wow! Of couse, some will argue this was necessary to pay for WWI.

But, let's consider the Great Depression. This is where I believe smart people realized a pure democratic government is dangerous, and that's why our founding fathers formed a Constitutional Republic. During the Great Depression, the government used its newfound power (the income tax) to raise taxes on the "fortunate" and redistribute their wealth to the "less fortunate." By 1938 government revenue was 20.3% of GDP (8.39% fed, 5.36% state, 6.56% local)! Wow, again!!

What happened?? Well, the politicians convinced the masses (the "less fortunate") that the government would solve their problems (food, shelter, etc.) by raising taxes on those who had money (the "fortunate"). This is wealth redistribution.

I know this post has gone beyond "brief" at this point, so I will close with this: "class warfare" has brought this great country to the brink of self-collapse. Since the Great Depression, the less fortunate have demanded amenities from the government, and then elected officials who would provide those amenities --- at the expense of their fellow citizens.

Today, government revenue is more than 35% of GDP.


With Generous Support From...