Tuesday, November 29, 2011

OWS Changes the Conversation

The payroll tax cut used to be a Republican idea, but now that President Obama is for it, they're against extending it. That is, until Occupy Wall Street made clear the division between the 1% and the 99%:

If Republicans block the measure, as expected, Democrats would paint them as the party of the rich.

Trying to get ahead of the game, McConnell proclaimed Republican support for the payroll tax cut extension and told reporters his party would soon propose its own ideas for covering the cost of the tax cut.

"The Democrats put them in a box," said Andrew Taylor, a North Carolina State University political science professor. "I think many Republicans realized this is a bad side of the argument to be on."

Thanks to the protesters, there's media buzz highlighting the GOP's behavior and allegiances. It's common knowledge now, nothing anyone can obfuscate with rhetoric. And you know #OWS matters when the new GOP frontrunner, Newt Gingrich, calls on President Obama to repudiate the movement and its message of wealth inequality.

As Robert Reich tells us, the Basic Bargain holding our society together and creating growth in the 20th Century has been torn apart by greed and must be restored:

For most of the last century, the basic bargain at the heart of the American economy was that employers paid their workers enough to buy what American employers were selling.

That basic bargain created a virtuous cycle of higher living standards, more jobs, and better wages.


The latest data on corporate profits and wages show we haven't learned the essential lesson of the two big economic crashes of the last 75 years: When the economy becomes too lopsided -- disproportionately benefiting corporate owners and top executives rather than average workers -- it tips over.

In other words, we're in trouble because the basic bargain has been broken.


Corporations don't need more money. They have so much money right now they don't even know what to do with all of it. They're even buying back their own shares of stock. This is a bonanza for CEOs whose pay is tied to stock prices and it increases the wealth of other shareholders. But it doesn't create a single new job and it doesn't raise the wages of a single employee.

Nor do the wealthiest Americans need more money. The top 1 percent is already taking in more than 20 percent of total income -- the highest since the 1920s.

American businesses, including small-business owners, have no incentive to create new jobs because consumers (whose spending accounts for about 70 percent of the American economy) aren't spending enough. Consumers' after-tax incomes dropped in the second and third quarters of the year, the first back-to-back drops since 2009.

The Dems are proposing to pay for the payroll tax cut with a surtax on millionaires -- affecting 0.2% of the U.S. population.

I hesitate to ask what 1%-favoring counterproposal GOP will come up with themselves.

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