Since the 1980s, Republicans have insisted that tax cuts for the rich will benefit working people, but the rich just sock away their money and national needs are neglected. Yet, the same cycle is back again, says JP Sottile.
By JP Sottile
It is really important that the Republican Party decorated its Tax Cuts and Jobs Act with the word “Jobs” because the GOP is going to sell this to their base using the magical thinking that giving a big tax cut to corporations is giving a big raise to workers. The idea is that you give more money to big businesses. The executives, in turn, will take that excess money and trickle it down onto their employees in the form of raises.
This wishful thinking is predicated on the people at the top suddenly feeling compelled to share this new windfall when they’ve refused to share all the windfalls of the past. For some reason, that didn’t happen with the previous two big tax cuts (Reagan/BushII) and, of course, GOP supporters of this deal say “middle class hasn’t gotten a raise in decades,” without pointing out that the severe wage/income gap began with the coming of Ronald Reagan’s tax cut (the graphed data is stark) and it has continued unabated, George W. Bush’s tax cuts be damned.
You see, the average pay for an S&P 500 CEO is 271 times the pay of their average worker. And it’s 819 times workers making minimum wage. Amazingly, in 1965, the ratio was 20-to-1; by 1989, after the Reagan tax cuts, that ratio had widened to 59-to-1. Those dates – 1965 and 1989 – coincide with the high point of the Middle Class (1965) and the beginning of the end of the Middle Class (1989) as a mass phenomenon or what we called The American Dream.
And 1989 was a point of acceleration for the financialization of the economy, which brings me to the point: this economy is a hoarding economy, not a productive economy. Hoarding is rewarded over production. Inflating stock prices with buy-backs is rewarded. Inflated valuations and speculation are rewarded. Exotic financial devices that repackage and sell debt are…