by Randolph T. Holhut
Chief of AR Correspondents
April 9, 2013
IT'S TIME FOR CONGRESS TO FOCUS ON JOBS AND GROWTH
DUMMERSTON, Vt. -- Remember when President Obama was supposed to destroy the American economy with his nefarious, radical, tax-heavy, over-regulated, anti-business economic policies?
Well, if the President is bent on bringing our nation to its knees, he's doing an awful job of it.
In case you missed last week, the after-tax share of profit for corporate income in the United States was 19.2 percent in 2012. It was 19.3 percent in 2011. That number has not been this high since 1930, when it was 20.8 percent.
By contrast, during the Reagan boom years in the mid-1980s, the after-tax profit share was 14.5 percent.
So why are corporate profits surging even though overall economic growth is slow, and unemployment is still stubbornly high? Because corporations are paying taxes at a lower rate than they were during the Reagan era - and at this rate, it amounts to a roughly $5 trillion tax over the next decade on American workers. That's $5 trillion American workers haven't spent on consumer goods, housing and cars too.
Since 2008, corporate profits have risen nearly 20 times faster than workers' incomes. That explains a lot of the economic pain that many of us are going through.
Well, Obama's critics say, what about the deficit?
The federal deficit is going down - from the $1.4 trillion deficit from the fiscal 2009 budget of President George W. Bush to $1.1 trillion under Obama in fiscal 2012.
That's right. Over the past three years under President Obama, the federal deficit has fallen faster than at any time since the end of World War II. And deficits are projected to continue to decline slightly, even if nothing more is done, for the next 10 years.
So why do Republican keep talking about Obama's alleged = "job-killing" economic policies, when corporate profits are up and the deficit is down?
That's because it isn't Obama that's prolonging our nation's economic slump. It's the conservative Republicans and Democrats who are still screeching about the deficit. The Republicans want more budget and tax cuts, while some Democrats - including Obama - are willing to cut Social Security and Medicare to deal with the phantom menace of the deficit.
While deficit hysteria has infected both parties, you can give Republicans most of the blame for pushing austerity as economic policy - an idea as dumb as insisting that cutting taxes on the wealthy and corporations benefits everyone.
As we've seen in Europe, when you cut your nation's budget, you cut economic growth. Tax revenue declines as economic growth declines, and the more that you cut from government spending to make up for the revenue shortfall, the worse the economy gets - and deficits will increase.
There's no deficit crisis. There is a jobs crisis. Stubbornly high unemployment and sluggish consumer demand means a continued recession for most Americans, while corporations are making record profits and income inequality widens.
Because partisan gridlock has prevented the federal government from stepping in to stimulate the economy by creating new jobs, we now have an economy where there are three or four applicants for every job opening.
So what's the solution? How about the "Back To Work Budget" recently proposed by the Congressional Progressive Caucus? It would create seven million jobs through substantially increasing investments in fixing and replacing aging, crumbling public infrastructure.
This budget would also reduce the federal deficit by $4.4 trillion over 10 years by raising taxes on millionaires and billionaires up to 49 percent, taxing income from investments at the same rate as wages, eliminating subsidies for oil, gas, and coal companies, and instituting a financial transaction tax.
Seventy-two percent of Americans, according to a recent Gallup poll, support putting people back to work on infrastructure projects and using federal money to do it. Yet the Republican majority in the U.S. House - and 102 spineless Democrats - rejected the Progressive Caucus budget by a 327-84 margin.
So let's put these two myths to rest.
By bringing the corporate tax rate up to Reagan-era levels, while focusing on a pro-jobs, pro growth economic agenda, we can begin to build the foundation for future prosperity for all Americans.
AR's Chief of Correspondents, Randolph T. Holhut, holds an M.P.A .from the Kennedy School of Government at Harvard University and is an award-winning journalist in New England for more than 30 years. He edited "The George Seldes Reader" (Barricade Books), and has contributed to The American Reporter since 1996. He can be reached at firstname.lastname@example.org.