It’s STILL the economy, stupid!

August 30, 2010 | By | 4 Replies More

Former Clinton Labor Secretary Robert Reich has it right.

Democrats should propose eliminating payroll taxes on the first $20,000 of income, and making up the revenue loss by applying payroll taxes to incomes above $250,000. This would give the economy an immediate boost by adding to the paychecks of just about every working American. 80 percent of Americans pay more in payroll taxes than they do in income taxes. And because lower-income people would get most of the benefit, it’s likely to be spent.

It would also give employers an extra incentive to hire because they’d save on their share of the payroll tax. And most of the incentive would be directed toward hiring lower-income workers – who have taken the biggest hit on jobs and pay during the recession.

It wouldn’t add to the deficit. Lost revenues would be made up by applying payroll taxes to income exceeding $250,000. This is certainly fair. As it is now, the Social Security payroll tax doesn’t apply to any income over $106,000. Having the tax kick in again at $250,000 would draw on the top 3 percent of earners, who (as noted) now rake in a larger portion of total income than they have in more than 80 years.

Call it the People’s Tax Cut, and let Republicans explain why they’re against it.”

The other ways that we could improve the economy are simple, may be targeted and could lead to long term employment by many of the some 15 million Americans currently out of work.  I recommend the following proposals:

– Expansion of the federal bi-partisan HIRE program which has led to many new job hires by a cross-section of businesses in America. The HIRE program targets persons with criminal records and reduces the financial and associated risks of the employment of person with criminal histories. Increase employment in this most “at risk” group will pay for itself with increased revenue from the taxes paid by the newly employed and reduced recidivism which reduces costs of confinements.

– Expansion of the credit amounts and the terms and conditions of loans guaranteed by the Small Business Administration. Recent efforts to expand supports of community bank lending to small businesses have been stalled because of claimed “bailout” issues.

Fine, take the private sector and the “bailouts” out of the program by making the SBA the lender and reduce the costs and origination fees to small businesses. Recent changes in student loan programs which eliminated banks as the “middlemen” will save the government some $68 billion over the next 10 years, why not the same for small businesses?

Put the some $30 billion (which is too little, bump it to some $50-60 billion!) into a new revolving loan fund for small business to expand capacity and employment while continuing the small business employment tax credit programs of the stimulus plan.

Have the Congress make a new commission or charge an existing agency to study and report back on the impact of non-tariff trade barriers to the export of US goods. Some countries bar the import of US goods for consumer safety or environmental or other reasons. When US manufacturers became aware of such barriers, they improved the US good and exported. If the non-tariff trader barriers are of such significance to bar the export of US manufactured good, the government could make specific grants or loans or loan guarantees to spur specific development of products or product improvements to allow the goods to be exported. Such would boost US export of manufactured goods and provide a resource for innovation for manufacturers on the bubble about certain changes in products so as to increase exports. Obviously, such would boost employment in the distressed manufacturing sector of the US economy and possibly slow the export of US manufacturing jobs.

Image by Dreamstime (used with permission)

Congress must pass a real stimulus bill without the non-revenue generating and non-job generating tax breaks for businesses and the wealthy of the first stimulus bill.

The Obama Stimulus Plan put nearly a third of the some $800 billion into tax cuts and roughly 18% into infra-structure improvements. There is a chance to get this right. Now is the time to put it on the line that what America needs is a direct stimulus of some $110 billion for job growth in the funding of bricks and mortar for schools, playgrounds, roads, highways, rivers, dams, park and national forest improvements. That same amount was mis-directed to give big business tax breaks that even the Bush administration failed and refused to give to business.

Mr. Obama needs to pony up and come clean with Americans that the economy will not get better with more of the same “tax cut and spend” policies of the Lost Decade of the Bush/Cheney years. Mr. Obama needs to admit that the paper chase he has lead for “bi-partisanship” was made a sham by Republicans because you can’t have “bi” anything when all one side says is  “NO!” and only proffers the same failed alternatives for the future which were rejected by voters in 2006 and 2008. Mr. Obama, it’s time to take real steps to help real Americans who want prosperity and abundance for all Americans and ignore those political opponents whose only goal is to see him fail.


Category: Economy, Politics

About the Author ()

imothy E. Hogan is a trial attorney, a husband, a father of two awesome children and a practicing Roman Catholic in St. Louis, Missouri. Mr. Hogan has done legal and political work in Jefferson City, Missouri for partisan and non-partisan social change, environmental and consumer protection groups. Mr. Hogan has also worked for consumer advocate Ralph Nader in Washington, DC and the members of the trial bar in the State of New York. Mr. Hogan’s current interests involve remaining a full time solo practitioner pioneer on the frontiers of justice in America, a good husband and a good father to his awesome children.

Comments (4)

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  1. Tony Coyle says:


    Great post. I don't always agree with Mr Reich — he seems (in many cases) to be posturing for effect, rather than proposing serious policy.

    In this case however he has it exactly right.

    There are many taxes on business that seem to reward 'high income' populations while penalizing 'low income' groups. The payroll tax is simply one of many. The tax code needs to be reviewed for fairness (and no – not the FAIR Tax, or FLAT TAX – those are unfairly unprogressive)

  2. Brynn Jacobs says:


    Can you point to examples of what you consider to be "posturing for effect" in Reich's statements? I've always thought he seemed to have a pretty good grasp of the issues involved, as well as practical solutions. His book "Supercapitalism" provided a pretty good look at the development of globalized corporate superpowers which are now gaming the system, and I've followed his blog since the financial crisis began in late 2008. It seemed to be that most of his criticisms have been spot-on, but wondering what your perspective is?

  3. Tony Coyle says:


    It's not his writing – it's more his statements on TV that affect me that way (I should have been clearer).

    I agree that his written perspective is much more focused. I don't always agree with his policy pronouncements, but I can usually understand where he's coming from, and what he's trying to achieve.

    But around polarized debate – especially when he is outside his 'zone of competence' and acting just as a talking head – sometimes in those situations he'll say things that make me ask myself "did he just say what I thought he said?".

    This doesn't make him wrong. It's simply jarring (especially when I can see from his history and his writing that he is a smart guy, and obviously not communication challenged). Hence, when I see him make such statements, I think "posturing for effect" rather than "presenting a position".

  4. Brynn Jacobs says:

    Ah, I see. I don't watch broadcast TV, so I haven't seen him (or any other "talking head") in quite some time. I think being on TV and expected to have an opinion on everything can certainly lead people to say things that are not very well thought out.

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