Robert B. Reich's Blog, page 24
April 6, 2021
How Corporations Crush the Working ClassThe most dramatic change...
How Corporations Crush the Working Class
The most dramatic change in the system over the last half-century has been the emergence of corporate giants like Amazon and the shrinkage of labor unions.
The resulting power imbalance has spawned near-record inequalities of income and wealth, corruption of democracy by big money, and the abandonment of the working class.
Fifty years ago, General Motors was the largest employer in America. The typical GM worker earned $35 an hour in today’s dollars and had a major say over working conditions.
Today’s largest employers are Amazon and Walmart, each paying far less per hour and routinely exploiting their workers, who have little recourse.
The typical GM worker wasn’t “worth” so much more than today’s Amazon or Walmart worker and didn’t have more valuable insights about working conditions.
The difference is those GM workers had a strong union. They were backed by the collective bargaining power of more than a third of the entire American workforce.
Today, most workers are on their own. Only 6.4% of America’s private-sector workers are unionized, providing little collective pressure on Amazon, Walmart, or other major employers to treat their workers any better.
Fifty years ago, the labor movement had enough political clout to ensure labor laws were enforced and that the government pushed giant firms like GM to sustain the middle class.
Today, organized labor’s political clout is minuscule by comparison.
The biggest political players are giant corporations like Amazon. They’ve used that political muscle to back “right-to-work” laws, whittle down federal labor protections, and keep the National Labor Relations Board understaffed and overburdened, allowing them to get away with egregious union-busting tactics.
They’ve also impelled government to lower their taxes; extorted states to provide them tax breaks as a condition for locating facilities there; bullied cities where they’re headquartered; and wangled trade treaties allowing them to outsource so many jobs that blue-collar workers in America have little choice but to take low-paying, high-stress warehouse and delivery gigs.
Oh, and they’ve neutered antitrust laws, which in an earlier era would have had companies like Amazon in their crosshairs.
This decades-long power shift – the ascent of corporate leviathans and the demise of labor unions – has resulted in a massive upward redistribution of income and wealth. The richest 0.1% of Americans now have almost as much wealth as the bottom 90% put together.
The power shift can be reversed – but only with stronger labor laws resulting in more unions, tougher trade deals, and a renewed commitment to antitrust.
The Biden administration and congressional Democrats appear willing. The House has just passed the toughest labor reforms in more than a generation. Biden’s new trade representative, promises trade deals will protect American workers rather than exporters. And Biden is putting trustbusters in critical positions at the Federal Trade Commission and in the White House.
And across the country, labor activism has surged – from the Amazon union effort, to frontline workers walking out and striking to demand better pay, benefits, and safety protections.
I’d like to think America is at a tipping point similar to where it was some 120 years ago, when the ravages and excesses of the Gilded Age precipitated what became known as the Progressive Era. Then, reformers reined in the unfettered greed and inequalities of the day and made the system work for the many rather than the few.
It’s no exaggeration to say that we’re now living in a Second Gilded Age. And today’s progressive activists may be on the verge of ushering us into a Second Progressive Era. They need all the support we can give them.
April 4, 2021
Mr. Fix-It
April 1, 2021
What if We Actually Taxed the Rich?Income and wealth are now...
What if We Actually Taxed the Rich?
Income and wealth are now more concentrated at the top than at any time over the last 80 years, and our unjust tax system is a big reason why. The tax code is rigged for the rich, enabling a handful of wealthy individuals to exert undue influence over our economy and democracy.
Conservatives fret about budget deficits. Well, then, to pay for what the nation needs – ending poverty, universal health care, infrastructure, reversing climate change, investing in communities, and so much more – the super-wealthy have to pay their fair share.
Here are seven necessary ways to tax the rich.
First: Repeal the Trump tax cuts.
It’s no secret Trump’s giant tax cut was a giant giveaway to the rich. 65 percent of its benefits go to the richest fifth, 83 percent to the richest 1 percent over a decade. In 2018, for the first time on record, the 400 richest Americans paid a lower effective tax rate than the bottom half. Repealing the Trump tax cut’s benefits to the wealthy and big corporations, as Joe Biden has proposed, will raise an estimated $500 billion over a decade.
Second: Raise the tax rate on those at the top.
In the 1950s, the highest tax rate on the richest Americans was over 90 percent. Even after tax deductions and credits, they still paid over 40 percent. But since then, tax rates have dropped dramatically. Today, after Trump’s tax cut, the richest Americans pay less than 26 percent, including deductions and credits. And this rate applies only to dollars earned in excess of $523,601. Raising the marginal tax rate by just one percent on the richest Americans would bring in an estimated $123 billion over 10 years.
Third: A wealth tax on the super-wealthy.
Wealth is even more unequal than income. The richest 0.1% of Americans have almost as much wealth as the bottom 90 percent put together. Just during the pandemic, America’s billionaires added $1.3 trillion to their collective wealth. Elizabeth Warren’s proposed wealth tax would charge 2 percent on wealth over $50 million and 3 percent on wealth over $1 billion. It would only apply to about 75,000 U.S. households, fewer than 0.1% of taxpayers. Under it, Jeff Bezos would owe $5.7 billion out of his $185 billion fortune – less than half what he made in one day last year. The wealth tax would raise $2.75 trillion over a decade, enough to pay for universal childcare and free public college with plenty left over.
Fourth: A transactions tax on trades of stock.
The richest 1 percent owns 50 percent of the stock market. A tiny 0.1 percent tax on financial transactions – just $1 per $1,000 traded – would raise $777 billion over a decade.That’s enough to provide housing vouchers to all homeless people in America more than 12 times over.
Fifth: End the “stepped-up cost basis” loophole.
The heirs of the super-rich pay zero capital gains taxes on huge increases in the value of what they inherit because of a loophole called the stepped-up basis. At the time of death, the value of assets is “stepped up” to their current market value – so a stock that was originally valued at, say, one dollar when purchased but that’s worth $1,000 when heirs receive it, escapes $999 of capital gains taxes. This loophole enables huge and growing concentrations of wealth to be passed from generation to generation without ever being taxed. Eliminating this loophole would raise $105 billion over a decade.
Six: Close other loopholes for the super-rich.
For example, one way the managers of real estate, venture capital, private equity and hedge funds reduce their taxes is the carried interest loophole, which allows them to treat their income as capital gains rather than ordinary wage income. That means they get taxed at the lower capital gains rate rather than the higher tax rate on incomes. Closing this loophole is estimated to raise $14 billion over a decade.
Seven: Increase the IRS’s funding so it can audit rich taxpayers.
Because the IRS has been so underfunded, millionaires are far less likely to be audited than they used to be. As a result, the IRS fails to collect a huge amount of taxes from wealthy taxpayers. Collecting all unpaid federal income taxes from the richest 1 percent would generate at least $1.75 trillion over the decade. So fully fund the IRS.
Together, these 7 ways of taxing the rich would generate more than $6 trillion over 10 years – enough to tackle the great needs of the nation. As inequality has exploded, our unjust tax system has allowed the richest Americans to cheat their way out of paying their fair share.
It’s not radical to rein in this irresponsibility. It’s radical to let it continue.
March 28, 2021
The Bigot Party
March 21, 2021
Bessemer and the Power Shift
March 16, 2021
The Biggest Deficit You’ve Never Heard OfAmerica has a deficit...
The Biggest Deficit You’ve Never Heard Of
America has a deficit problem. But the country’s biggest deficit isn’t the federal budget deficit. It’s the deficit in public investment.
The public investment deficit is the gap between what we should be investing in our future — on infrastructure, education, and basic research — and the relatively little we are investing.
Increasing public investment needs to be a major goal of the Biden administration.
Public investment is similar to private investment in that we invest today because of the payoff in the future. The difference is public investment pays off for all of us, for America.
In the 1960s, we used to make a lot of public investments. But they’ve been steadily declining ever since.
That decline has been largely driven by so-called “deficit hawks” who argue against more federal spending. But as I’ve been saying for years, reducing the federal deficit just for the sake of reducing it makes no sense.
Any business person knows that you borrow money for the sake of investing in the future of your business. Those are wise borrowings. Because then you can pay those debts off when they get bigger.
A national economy works exactly the same way. It doesn’t matter that we’re borrowing money, if we’re investing those monies that we borrowed from abroad — in education, training, infrastructure, factories — but we’re not.
The public return on infrastructure investment, based on 2020 report taking into account the pandemic, averages $2.70 for every single public dollar invested — yet we haven’t made those investments. Our infrastructure today is crumbling.
The return on early childhood education is between 10 and 16 percent — but only a handful of our children have access to early childhood education.
Public investment on clean energy has an annual return of over 27 percent. But federal tax breaks favor fossil fuels over renewables by about 7 to 1.
The public return on investments in basic research and development are huge. America’s competitiveness depends on them, because no individual company has an incentive to make them. The lithium-ion battery that powers iPhones and electric cars was developed by federally sponsored materials science research, while the Internet itself was borne out of the Advanced Research Projects Administration.
And yet in recent years, public investment in basic research has declined as well.
Are you seeing a pattern yet? Federal investments in all these areas have shrunk — even though the payoffs from these investments are gigantic, and the costs of not making them are astronomical. American productivity is already suffering.
Now, some say we don’t need to worry about this public investment deficit because private investments fill the gap. Baloney.
Corporations are focused on getting the best return for themselves, not for America. For most of the last four decades, they’ve made money by lowering their costs, at the expense of working people: capping wages, reducing taxes, and deregulating.
A common assumption is that when American corporations are profitable, Americans are better off. But that’s false. Trickle-down economics is a sham. Tax cuts and subsidies to big corporations and the wealthy don’t build the economy. Economies don’t grow from the top down — they grow from the bottom up, through public investment.
So if private investment won’t fill the gap, how do we fill it? Two ways: tax the wealthy and large corporations, and borrow.
Tax rates on the wealthy and on corporations have continued to drop over the past 40 years, just as the deficit in public investment has grown. In the 1950s, the highest tax rate on individuals was over 90 percent. Even after tax deductions and credits, it was still over 40 percent. But since then, tax rates have dropped dramatically. For the first time on record, the 400 richest Americans now pay a lower effective tax rate than people in the bottom half.
Revenue from corporate taxes has also plummeted.
If wealthy individuals and corporations want all the advantages that come with being American, they have to pay taxes so America can afford the public investments necessary for a high-wage, high-productivity society.
The other way to pay for public investment is through public borrowing. This kind of borrowing doesn’t burden future generations, because it’s used to build a better future for those future generations.
Remember: There’s a difference between borrowing for the future and borrowing for today. You might not want to borrow to pay for a vacation, but it’s perfectly rational to borrow to purchase a house, because a vacation doesn’t have any future return, while a home does. Right now, the federal budget irrationally treats all government borrowing the same.
The government needs a public investment budget separate from the current spending budget to clarify what we’re investing in and allow us to keep borrowing for investments as long as the returns justify it.
Public investment is the biggest and most important deficit you’ve never heard of.
Don’t listen to people who claim we can’t afford to invest in the American people. We can afford it. We can’t afford not to. Joe Biden needs to recognize this, and make public investment a central part of his economic strategy.
March 14, 2021
How Bidenomics Unites America
March 9, 2021
Biden Must Get Manchin and Sinema to Fall in LineAmerica is at a...
Biden Must Get Manchin and Sinema to Fall in Line
America is at a turning point on voting rights – one that’s almost as critical as the mid-1960s when the Civil Rights and Voting Rights Acts were passed.
The present choice is whether to expand voting rights and strengthen our democracy, or allow the GOP to enact even more restrictive voting laws and partisan gerrymandering — cementing themselves in minority rule for years to come.
Just as in the mid-1960s, presidential leadership will be a decisive factor.
Across the country, state Republicans have introduced over 250 bills restricting the right to vote. As a lawyer for the Arizona GOP recently admitted before the Supreme Court in seeking to defend the state’s voting restrictions, if they’re eliminated, “it puts us at a competitive disadvantage relative to Democrats.”
Democrats in Congress are fighting back against this anti-democratic agenda with their For the People Act and the John Lewis Voting Rights Advancement Act.
These bills would automatically register new voters, outlaw gerrymandering, expand early voting, ban restrictions on mail-in ballots, reform campaign finance laws, and restore the 1965 Voting Rights Act.
Mitch McConnell calls it a “power grab.” It is a power grab – grabbing power back for the people.
Yet although Democrats now possess a razor-thin majority in the Senate, these efforts don’t stand a chance unless Democrats overcome two obstacles there.
The first is the filibuster, a rule requiring 60 votes to pass regular legislation. The filibuster is not in the Constitution and not even in law. It’s just a Senate rule, which Democrats can and must end with their 51-vote bare majority.
The filibuster has historically been used against civil rights and voting rights. So it’s appropriate that Democrats finally end it in order to protect and expand these rights in the face of state efforts to restrict them.
Which raises the second obstacle. Two Democratic senators – West Virginia’s Joe Manchin and Arizona’s Kyrsten Sinema – have said they won’t vote to end the filibuster, presumably because they want to preserve their centrist image and appeal to Republican voters in their states.
Well, I’m sorry. The stakes are too high. We are talking about the future of civil and voting rights — critical to fighting racism and preserving American democracy. There is no excuse for two Democratic senators to allow Republicans to stomp on our democracy and entrench their minority rule for generations.
And there is no reason President Joe Biden should let them. It’s time for him to assert the leadership that President Lyndon Baines Johnson asserted more than a half-century ago.
When someone tried to persuade LBJ not to waste his time on civil and voting rights, he replied, “Well, what the hell’s the presidency for?” Johnson worked to break the southern filibuster – lobbying recalcitrant senators and pressuring their colleagues to do the same. As Senator Hubert Humphrey later described it, “the president grabbed me by my shoulder and damn near broke my arm.”
Historians tell us that Johnson’s efforts may have shifted the votes of close to a dozen senators, breaking the longest filibuster in Senate history and clearing the way for passage of the Civil Rights Act of 1964 and Voting Rights Act of 1965.
We are once again at a crucial juncture for civil rights and voting rights, one that will shape our nation for decades to come. Joe Biden must learn from LBJ, and wield the power of the presidency to make senators fall in line with the larger goals of the nation. Otherwise, as LBJ asked, “what the hell’s the presidency for?”
March 8, 2021
Joe Biden, LBJ, and Voting Rights
February 28, 2021
Why Trump’s Takeover of the GOP is Great for Biden and the Democrats (but a Potential Disaster for America)
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