"Renaissance Thinking About the Issues of Our Day"
This week, Democrats want to pay for a tax cut for working-class people with a 3 percent increase in income taxes on people who have earned over a million dollars a year, and the tax would only kick in on the one-million-and-first dollar.
Republicans, of course, are opposed, they want to pay for the tax cut for working people by firing thousands of working people - federal employees, driving up unemployment and making the economy really, really bad for Obama in the 2012 elections.
But what's really amazing is how timid a proposal this is by the Democrats, and how insane the Republican response is.
Taxes effect behavior - especially millionaires' behavior - but not in the way that you've been spoon-fed by billionaire front groups like the Heritage Foundation, CATO Institute, Reason Foundation, Fox News, or the Wall Street Journal.
Just take a look at recent history.
In a 1966 article - TIME magazine looking ahead toward the future - and what the rise of automation would mean for average Americans, what the article was about. It concluded:
By 2000, the machines will be producing so much that everyone in the U.S. will, in effect, be independently wealthy. With Government benefits, even nonworking families will have, by one estimate, an annual income of $30,000-$40,000.
Now, that was in 1966 dollars, it would be like $100,000, $120,000 a year now.
How to use leisure meaningfully will be a major problem.
... wrote the article. The premise was simple - with better technology - companies would become more efficient - they'd be able to make more things in less time.
Profits would skyrocket - and Americans would bring home higher and higher paychecks - and all the while working less and less.
So by the year 2000 - back in 1966 looking forward - things would look like this: [clip from the introduction to the Jetsons]
We would enter what was referred to as "The Leisure Society".
And the only problems facing America would be - just how the heck everyone would use all that extra leisure time!
What kind of things would people get into when a nation has lots of money and lots of free time on their hands?
And as we know today - we WISH that was our biggest problem.
Turns out - predictions about the leisure society were dead wrong.
As this chart shows - productivity (here, now it shows) DID increase significantly during the 1960's. This actually starts from 1947 up to 2000 - mostly thanks to automation and better technology.
Unfortunately - wages didn't.
And neither did leisure time.
In the 1950's - before that TIME magazine article predicting the leisure society was written - the average American working in manufacturing put in about 42 hours of work a week.
Today - average working people put in in manufacturing about 40 hours of work a week.
Meaning despite the fact that productivity has increased 400% since 1950 - Americans are only working - on average - 2 hours less a week.
Just two hours less - that's it.
Think about the math for a second:
If productivity is four times higher today than in 1950 - then Americans should be able to work four times less - or just 10 hours a week - to afford the same 1950's lifestyle - when a family of four could get by on just one paycheck - own a home - own a car - put their kids through school - take a vacation every now and then - and retire comfortably.
That is the definition of the Leisure Society - ten hours of work a week - the rest of the time spent with family - with travel - with creativity - with whatever you want.
Oddly though - most Americans today can't get by working 40 - or even 50 hours - a week.
In fact - 20% of our country - one fifth of us - lives in economic insecurity - meaning they can't afford all of life's essentials like healthcare, transportation, and food.
So the question is...how did this happen?
Why - despite the fact that automation DID drastically increase productivity - why did the Leisure Society never emerge?
What went wrong?
For the answer - we should ask this guy.... [photo of Ronald Reagan]
Because it's HIS tax cuts which are the reason why we all don't live in the Leisure Society today.
In 1966 - when the TIME article was written - the top income tax rate was 70%.
And what that effectively did was encourage CEOs to keep more money in their businesses - to invest in new technology - to pay their workers more - to hire new workers and expand their companies.
After all, what's the point of sucking millions and millions of dollars out of your business if it's going to be taxed at 70%?
Thinking that way - if suddenly businesses became WAY more profitable and efficient thanks to automation - then that money would flow throughout the business - raising everyone's standard of living - increasing everyone's leisure time.
But when Reagan dropped that top tax rate down to 28% - everything changed.
Now - as businesses became more profitable - there was far more incentive for the CEOs and senior executives - to pull those profits out of the company - and pocket them because suddenly they were paying an incredibly low tax rate.
And that's exactly what they did.
All those new profits thanks to automation that were SUPPOSED to go to everyone - giving us all higher paychecks and more time off - went just to the top 1% - to just about 345,000 millionaires.
As this chart shows....
Growth in Real After-Tax Income from 1979 to 2007
... everyone's wealth has pretty much stagnated since the Reagan tax cuts - except for the top 1%. This is the other 99% [indicates all but the right hand column]
Thanks to Reaganomics, our national focus shifted from how we can be more efficient, make things better, and create a middle class - to - "how can I as a CEO suck as much money out of whatever sector I work in - from manufacturing to healthcare to communications?"
That became the mantra - "how can I suck that money out".
So, yeah - the Leisure Society did come to America after all - but only the 1%ers enjoy it.
And until we roll back the Reagan tax cuts and restore the equilibrium that came with tax rates that built this nation through the 1940s, 50s, 60s, and seventies - the time of America's middle class's fastest and most solid growth in history - then the Leisure Society will never be a reality for the average American.
Roll back the Reagan tax cuts now.
That's The Big Picture.