The rich have been waging class warfare against the rest of us for a long time, and over the last 30 years or so, they have been winning, as the U.S. has experienced a regressive redistribution of income. It will get even worse if the recommendations made by the federal deficit commission in a draft released last week are implemented.
The majority of the deficit was caused by tax cuts heavily favoring the rich that were pushed through by former President George W. Bush, which eliminated surpluses achieved under his predecessor, Bill Clinton, but it isn’t on the commission’s agenda to deal with such obvious matters. Instead, the 18-member commission, co-chaired by former Clinton chief of staff Erskine Bowles and former Sen. Alan Simpson (R-WY), prefers to declare war on the middle class, claiming that “sacrifices” are needed to eliminate a $4 trillion deficit over the next 10 years, but not at the expense of those who can most afford to make them.
So under the commission’s draft, the top income tax rate would be reduced from 36 to 23 percent and the alternative minimum tax abolished, while eliminating the mortgage interest deduction, earned income tax credit and child tax credit. The federal gas tax would be increased, but there would be no new federal tax on the financial industry. Federal and noncombat military pay would be frozen for three years, while funding for Medicare, the National Park Service and PBS would be cut.
Social Security, which can’t borrow legally and has always run a surplus, doesn’t contribute to the deficit, but wound up in the commission’s crosshairs, for many of its members are out to further shred the social safety net. Under the draft, cost-of-living adjustments would be reduced, while the retirement age would gradually rise to 68 in 2050 and 69 in 2075. It didn’t matter to the commission that the Social Security trust fund is completely sound for at least 25 years, and that any possible future insolvency can be avoided by eliminating the cap on income over $106,800 a year subject to the FICA tax.
This draft may prove to be dead on arrival, but that won’t stop the commission from making more mildly regressive recommendations when its final version is sent to Congress on Dec. 1. At least 14 commission members must agree to the final report before Congress can vote on it, but the terms of debate seemed designed to move the U.S. further in the direction of becoming a Third World country, one with a few people who are very rich, a lot of people who are very poor, and not much of a middle class in between.