Analiese’s Reading 3/26
Economics edition: Why talking about the top marginal tax rate is too simplistic, how current labor organization law is failing workers, how our views of government translate to our views of health care, ignoring the economic “distractions,” why the Obama administration’s centrist views on the economy are bad for us.
The Missing $1,000,000 Tax Bracket
Matt Yglesias has this creepy habit of writing about things the very moment that I’m thinking about them. Today I was looking at this handy chart prepared by the National Taxpayers’ Union on the top marginal tax rates at different points in time. If you’re at all familiar with debate over tax policy, this will be pretty familiar territory to you: the top marginal tax rate is now higher than it was under Reagan, but lower than it was under Clinton, and much lower than it’s been at various other points in history. (The average top marginal tax rate since the income tax was established is 60 percent).
What the discussion over the top marginal tax rate ignores, however (and what Ygelsias picks up upon) is that this rate has been assessed at very different thresholds of income. In 1940, for example, the top marginal tax rate was 81.1 percent — but this rate only kicked in once you made $5,000,000 or more in income, which is equivalent to about $75,000,000 in today’s dollars.
Why Labor Law Doesn’t Work for Workers
Behind the verbal fireworks, workers on the ground say that current labor law has no teeth and must be changed. In Lancaster, California, one of the country’s hardest-fought organizing drives highlights the obstacles they face. A year ago, employees at Rite Aid’s huge drug warehouse there voted to join a union. On March 21, 2008, the National Labor Relations Board certified that union, giving it the right to negotiate a first union contract. But Rite Aid, workers say, has just been waiting for the year to expire. Once it does, the company can stop the pretense of negotiating.
Competing Views of Government: Universal Medicare or Government-Protected Insurance Companies
We all know that people have different ideologies about the proper role of government. Some people, who tend to be left of center, think that the government’s role is to try to promote the general good, by providing basic services, protecting the poor and the sick, and ensuring a well-working economy. On the other hand, there are others, who usually place themselves right of center, who believe that the proper role of government is to redistribute as much income as possible to the wealthy.
Capitalism and Moral Sentiments
In recent days, both Tom Friedman and David Brooks urged us to take our attention away from the trivialities of the AIG bonuses (just 0.001 percent of GDP, sniffed Brooks), to focus on truly weighty macroeconomic matters. Friedman bade us to look forward to, and support, the next mega-bailout of the banks, and Brooks applauded the leadership of Mssrs. Geithner and Summers in leading the G20 to macroeconomic stimulus and a rejuvenation of the International Monetary Fund.
Both pieces had the feel of planted stories, with insider tips about what’s coming next and praise for the economics team as it battles against little minds in Europe and populist sentiments at home. Whether or not the stories came from Washington, both stories are wrong.
I’ll leave to others the question of who knew or should have known that the bonus firestorm was coming; but it’s part of a pattern. At every stage, Geithner et al have made it clear that they still have faith in the people who created the financial crisis — that they believe that all we have is a liquidity crisis that can be undone with a bit of financial engineering, that “governments do a bad job of running banks” (as opposed, presumably, to the wonderful job the private bankers have done), that financial bailouts and guarantees should come with no strings attached.
Financial Policy Despair
Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct, Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson.
This is more than disappointing. In fact, it fills me with a sense of despair.
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