Once again the policy analysts at the Iowa Policy Project dig way below the surface to give us the facts. As we all know, it is better to go into a discussion armed with facts and not talking points. For the past 12 years the IPP has been arming us with facts and actual repercussions. And once again we thank them greatly for allowing us to use their hard work.
Note: This brief is available on our website at this link: http://www.iowapolicyproject.org/2013docs/130305-minwage.pdf
March 5, 2013
IPP POLICY BRIEF
Minimum Wage: Off the Pace Again
Five Years Past Increase, Buying Power Eats Through Wage Floor
By Heather Gibney
Once upon a time, not so long ago, Iowa was among the leading states with its minimum wage of $7.25 per hour for non-tipped workers. That was then. This is now.
When 10 states raised their minimum wage on January 1, Iowa was not one of them. Iowa’s minimum wage has remained at $7.25 for five years, since the last increase — from $6.20 on January 1, 2008, the second part of a two-step increase approved by Iowa lawmakers in 2007. The federal wage did not catch up until July 2009, when it reached $7.25. Since then, neither the federal nor state minimum wage has changed to help Iowa families working at or near that hourly level. Every year that goes by without increasing the minimum wage affects Iowa families who are trying to keep their heads above water. The cost of living increases nearly every year, so the buying power of every dollar continues to erode.
Today, the federal minimum wage is near its historic low — having lost 22 percent of its buying power from its peak in 1968, as shown in Figure 1. (note: see figures at link). If the minimum wage had kept up with inflation since 1968, it would be worth $9.25 per hour today.
Recognizing that the federal minimum wage is too low, 19 states and the District of Columbia have a higher minimum wage than the federal, states with the highest being Washington at $9.19 per hour and Oregon at $8.95. Under the federal minimum wage law, a full-time Iowa worker earning a minimum wage makes $290 per week or about $15,000 per year before taxes, credits and cash assistance. There are some exceptions: Tipped employees in Iowa such as waiters or waitresses earn $4.35 an hour, while new employees under 20 years of age can be paid as low as $4.25 per hour for their first 90 days of employment.
In Iowa, nearly three-fourths of Iowa’s working single parents earn less than a family supporting wage. A single parent with two children has basic, no-frills monthly expenses of about $3,545, or $42,540 annually, according to IPP’s most recent Cost of Living in Iowa report.  This means that this family would have to make $48,111 a year before taxes were taken out and credits and cash incentives were included in order to support themselves — a supporting wage of $24.06 an hour.
Using either that measure or the federal poverty level, the minimum wage does not keep a full-time worker out of poverty. The most current official poverty guidelines for a single parent with two children is $18,498 — $3,000 more than for full-time minimum-wage work and much less than a family supporting income. Poverty guidelines are the basis for determining eligibility for public programs designed to support struggling workers. 
The calculations that underlie the federal poverty guidelines assume that food is a larger expense than it is today and it ignores the fact that housing and transportation take up a much larger portion of a family’s budget than they did in the 1960s when the guidelines were developed. In addition, poverty guidelines do not account for taxes, cash assistance, the increasing costs of child care and healthcare, and changes in consumer spending. Even this inadequate poverty level exceeds the minimum wage. Up until about 1980, an adult earning minimum wage with two children could support her family at about the poverty level. But as Figure 2 shows, this is no longer the case. (note: see figure 2 at link to IPP).
What a Higher Minimum Wage Would Mean in Iowa
In 2012, the Fair Minimum Wage Act of 2012 was introduced in the U.S. Senate and House of Representatives — this would have incrementally raised the federal minimum wage to $9.80 per hour by 2014. The rate would then have been indexed to inflation each year thereafter to keep up with the cost of living, a practice that 10 states have already adopted. A 2012 study from the Economic Policy Institute estimated that this bill if enacted would have affected 332,000 Iowans, 81 percent of whom are 20 or older, and 45 percent of whom work full time.
In the recent State of the Union address, President Obama made the case that raising the minimum wage was a necessary step in the effort to grow our economy. He proposed raising the wage from $7.25 per hour to $9.00 per hour and indexing it yearly to keep up with the cost of living. Senator Tom Harkin of Iowa has introduced a bill to raise the wage in three increments to $10.10, and index it.  Passage of any of these proposals in the U.S. Congress, however, is in doubt.
Raising the minimum wage would restore much of its historic value and make an enormous difference to millions of families. More than 30 million American workers would get a raise under the bill. More than half of these are women (17 million). The vast majority (88 percent) are adult workers, not teen-agers, and 23 million children (30 percent of all children) have parents who would get a raise. Increasing the minimum wage to $10.10 per hour would give $51.5 billion in raises to millions of workers over the course of three increases, and increase GDP by nearly $33 billion as workers spend their raises in their local businesses and communities. This economic activity would generate an estimated 140,000 new jobs over the course of three increases.
These benefits would come at little risk of the pitfalls forecast by opponents, who can be counted upon in every minimum-wage debate to warn — without evidence — that jobs will be lost. Despite economists’ thorough study of the employment impact of the minimum wage, this ill-advised argument continues to drive opposition rhetoric against minimum-wage improvements. The Center for Economic and Policy Research has examined the most recent empirical research on the minimum wage since the early 2000s to determine the best current estimates of the impact of increases in the minimum wage on the employment prospects of low-wage workers. It found that minimum wage increases are consistently associated with statistically significant and economically meaningful increases in the wages of affected workers. Employers and workers are able to adjust to an increase in the minimum wage through several different channels — explaining why the employment effect is so small.
The American Dream is supposed to be about creating a better life for yourself and your children. If you work hard and play by the rules, achieving your goals should not be out of reach. Unfortunately, millions of hard-working Americans cannot lift themselves out of poverty because they are working at such low-wage jobs. Even if they work all year long, they cannot make ends meet, much less join the middle class. Increasing the minimum wage puts money back into people’s pockets, improves the economy, and helps struggling communities thrive again.
 J.T. Rushing, “States Raising Minimum Wage,” The Gazette, January 1, 2013. http://thegazette.com/2013/01/01/states-raising-minimum-wage/
 Lily French, Peter S Fisher and Noga O’Connor, “The Cost of Living in Iowa,” Iowa Policy Project, May 2012. http://www.iowapolicyproject.org/2012docs/120531-COL.pdf
 Lily French, Peter S Fisher and Noga O’Connor, “The Cost of Living in Iowa,” Iowa Policy Project, May 2012. http://www.iowapolicyproject.org/2012docs/120531-COL.pdf
 However, these guidelines are flawed because they do not take into account regional differences in basic living expenses and were developed using spending patterns from over 45 years ago that are less relevant to today’s household budgets.
 Lily French, Peter S. Fisher and Noga O’Connor, “The Cost of Living in Iowa,” Iowa Policy Project, May 2012. http://www.iowapolicyproject.org/2012docs/120531-COL.pdf
 Doug Hall and David Cooper, “How Raising the federal minimum wage would help working families and give the economy a boost,” Economic Policy Institute, Issue Brief #341, August 14, 2012. http://www.epi.org/files/2012/ib341-raising-federal-minimum-wage.pdf
 Doug Hall and David Cooper, “Characteristics of workers who would be affected by increasing the federal minimum wage to $9.80 by July 2014,” Economic Policy Institute, Issue Brief #341, August 14, 2012. http://www.epi.org/files/2012/minimumwagestateimpact.pdf
 Congressman George Miller, “Sen. Harkin and Rep. Miller Statement on President Obama’s Minimum Wage Proposal,” February 13, 2013. http://georgemiller.house.gov/press-release/sen-harkin-and-rep-miller-statement-president-obama%E2%80%99s-minimum-wage-proposal
 Senator Tom Harkin and Representative George Miller, “Raising the Minimum Wage: Please cosponsor the Fair Minimum Wage Act of 2013,” Congress of the United States, February 25, 2013.
 John Schmitt, “Why Does the Minimum Wage Have No Discernible Effect on Employment?” Center for Economic and Policy Research, February 2013. http://www.cepr.net/documents/publications/min-wage-2013-02.pdf
Heather Gibney joined the Iowa Policy Project as a research associate in September 2012. She received her master’s degree in Public Policy from the University of Northern Iowa and undergraduate degrees in Psychology and Criminal Justice from the University of Iowa and Mount Mercy University.
The Iowa Policy Project Formed in 2001, the Iowa Policy Project is a nonpartisan, nonprofit organization. Reports are available at http://www.IowaPolicyProject.org. The Iowa Policy Project is a 501(c)3 organization. Contributions to support our work may be tax-deductible.
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Once more we turn the pages over to Larry Hodgden of Tipton to discuss the strange proposals by Gov. Branstad on education legislation
Our Governor, not to be outdone by his Republican friends in D.C., has created his own “fiscal cliff” for the school districts in Iowa by refusing to set the allowable growth in school budgets until he gets his education reform package passed.
For over forty years our school aid formula has, by law, required the Iowa legislature to pass an allowable growth formula a full year before superintendents, teachers and school boards negotiate their pay structure which then allows school districts time to have their budgets completed and certified, as required by law, no later than April 15.
Already one year behind schedule and with work not even begun on education reform which could take weeks, if not months, teachers have no idea what to request and school administration has no idea what to offer in salary negotiations. If this doesn’t complicate things enough, the Governor is proposing to completely change the school aid formula, a proposal he has yet to explain and will take even longer to get passed.
In spite of the evidence that Iowa will end the fiscal year with a one billion dollar surplus, the Governor is wasting his time, and ours, by focusing on a property tax reduction which will largely benefit his wealthy corporate friends in Des Moines and elsewhere. He and the legislature should be concentrating their efforts on funding education for the approaching school year.
The Democratic Senate, with our State Senator Bob Dvorsky’s leadership, has already proposed a 4% allowable growth for schools which hardly makes up for two years of zero and two per cent increases, but would be good step toward increasing starting teacher pay, something the Governor wants. The Republican House which blocked a setting of allowable growth last year as required by law should get on board the Senate plan and end this “sad State of affairs”.
Once again, Larry Hodgden expresses his views here. This was a letter to the editor before Christmas. It expresses feelings I think many felt over the Holiday. Thanks, Larry.
As you read this 20 families in Connecticut will be burying a child brutally killed by a mentally ill person who had access to an assault weapon, a weapon designed specifically to murder people. In 1993 a Democratic Congress passed an Assault Weapons Ban and it was signed by Bill Clinton. The NRA then created an atmosphere of fear, even though no one has ever advocated restricting legal ownership of guns for hunting or personal protection. This atmosphere of fear helped result in the defeat of many Democrats in 1994 and paved the way for the Republicans to gain control of Congress. Then in 2004 a Republican Congress and George Bush allowed the Assault Weapons Ban to expire.
I know people who hunt, even allowing some to hunt on my land, and none of them use an assault weapon to hunt. I know people who have a handgun permit and keep a gun in their home for personal protection. These guns, properly used and safely stored, are not the problem nor are they under threat of regulation.
There are 280 million guns in this country with 47% of Americans owning at least one so simply banning the sale of assault weapons will not solve this problem. But just because, as usual, we are too late to do the right thing for the children of Sandy Hook doesn’t mean we should never do the right thing.
In addition to addressing our gun laws we must also look at mental health issues because no one in their right mind slaughters innocent children or any of the other innocent lives taken this year. Our country has a problem with a culture of gun violence as evident in violent video games aimed at the young, in our movies glorifying mayhem and destruction as well as in much of what passes as music these days. As parents and citizens by purchasing and condoning this violence we have produced a growing number of young adults who turn to what they have learned to deal with their mental problems.
If you care to object to my position on this remember, I, along with nearly 5,000 fellow Cedar County citizens who voted for Barack Obama, have been called illiterate and fools in a recent letter so please try to be a little more creative in your defense of the status quo.
For those of you who turned off the news coverage because it was too painful or uncomfortable and missed the pictures and names of the 20 children who will not be enjoying Christmas with their families in a few days, your pain is nothing compared to that of the families of the slain innocent children.
Larry Hodgden graces blogforiowa once more with his opinion on the outcome of the recent election. As you may remember, Larry is a retired Viet Nam veteran who spends much of his time with his family.
Democracy. When voters endure eight hour waits in lines to vote and get in line in pre-dawn hours to mark their ballots, when hundreds of thousands, perhaps millions of unpaid volunteers give up their weekends, their nights and more to work tirelessly for their party and their candidate, when several hundred millions dollars of negative ads fail to fool the voters, when efforts to restrict the rights of citizens to vote are rejected by the courts, democracy has a real chance to prevail in the United States of America.
Congratulations to all the candidates, win or lose, you have made a great contribution to the democratic process as did the voters who had an unprecedented opportunity to consider differences between candidates and political parties. This was afforded us by our Constitution’s first amendment that guarantees the freedom of speech and freedom of the press, a freedom demonstrated to its fullest by all the papers that printed many letters from citizens wishing to express an opinion or remind us of the successes and failures from past political decisions.
We are all glad to see this election completed but our responsibilities as a citizen have not ended. We cannot hide our head in the sand or get all our news from a single partisan source and expect to make informed decisions. We should all monitor the legislative process going forward and remind our elected leaders of promises made. There is no disagreement that we face serious fiscal problems in this country, now let’s remind our new leaders of their need to compromise and solve those problems.
One final thought before the election from Larry Hodgden. Larry is a retired Viet Nam era veteran of the USAF. He and his wife of 40 years, Sharon, have three children and seven grandchildren who keep him very busy. Family, education, church and politics have been a lifelong passion. We at blogforiowa have appreciated his concise and well written contributions over the past several months.
Every election since I started voting has been called “the most important in our lifetime” and it may be true…… because the stakes seem to be higher each election cycle. We also hear that the choice has “never been clearer” and, while the choice has always been clear to me, it is true that the ideological positions of both Parties have never been more extreme or apparent.
So unless you prefer your own reality, the evidence and the facts are readily available to allow all of us to make an educated and intelligent choice this time. It seems it would also benefit each of us to question our own beliefs and compare them with the positions advocated by both major Parties. Do the positions of your Party provide the best path forward for our Nation and its citizens? For that matter, does your Party still represent you? Or do you, like so many, vote from habit, or out of self interest or because of a single issue or in fear and with hatred?
It’s your vote, use it any way you wish but it is obvious no Republican can defend the economic record of the Bush administration nor can they demonstrate how Romney/Ryan with the same plan can give us any different results. Nor can fair minded or compassionate people defend the religious and social intolerance in the Republican platform and its attacks on the equal rights of men and women which are guaranteed by the 14th amendment to our Constitution.
A Republican vote is a vote against health care reform which keeps young people insured until they’re 26 and assures them the ability to get insurance after that in case of pre-existing conditions. It’s a vote against free health screenings for men and women, against drug benefits for Medicare recipients and will change Medicare which has served our parents and grandparents so well. It will reduce Medicaid payments for our families and their children.
A Republican vote is a vote for Grover Norquist and his no tax pledge, it’s a vote for ALEC, a vote to end alternative energy sources, a vote to strip millions of Americans of their right to vote, it’s a vote to weaken public education, a vote to reduce taxes for millionaires and highly profitable corporations, it’s a vote to weaken the EPA which will lead to pollution of our air and water, a vote to kill regulations which protect us from Wall Street and banking fiascos.
The Tea Party dominated Republican Party has become so extreme in its positions that it has become an embarrassment to mainstream Republicans and risks marginalizing the Party to extinction. Your Republican vote will only encourage their extreme views and drive them further out of the mainstream. Your Republican vote is a risky proposition for the future well being of our country. There’s a better alternative, “Weigh Your Vote Carefully” and vote Democratic.
Today we have a guest post by Dave Hunt of Tipton. Dave is a retired educator and former Iowa Teacher of the Year.
Republicans won’t admit it but the 2009 Obama stimulus plan created and saved 3 million jobs and had the stimulus been larger or if the Republicans had not obstructed a second stimulus plan, millions more would be employed today. Even while they were blocking the second stimulus, Republican legislators were requesting stimulus money for their districts. Paul Ryan wrote two letters of request saying they would generate growth and create jobs
The same level of cynicism and hypocrisy followed the “Tea Party” takeover of Congress in 2010. After campaigning on “jobs, jobs, jobs” it has now been two years without a jobs bill introduced in the House and the Republicans killed the Democratic jobs bill as well as Obama’s jobs bill which would have employed millions more. Their “new plan” of cutting taxes and regulations is the same as George Bush tried in 2001 which led to a loss of 2.8 million jobs in 2008.
Republicans would like you to believe taxes have gone up though with the payroll tax reduction, the middle class received their biggest tax reduction in a generation. This was part of the Democratic stimulus plan they opposed and proved to be an efficient way to get money in the hands of working Americans.
With the greatest concentration of wealth in the hands of so few in our history and in spite of so many wealthy Americans recognizing they must pay more to be part of our debt solution and economic recovery, some misguided local letter writers insist on defending the continuation of low taxes on the wealthy. So where are the jobs if this record concentration of wealth is so good? The rate on taxes for the wealthy is now 50% of what it was during the 50s and 60s when our economy was booming and our deficits were low.
The average working American earns $50,000 and pays 25% in income taxes plus 6.7% in payroll taxes in addition to state taxes. They also pay sales tax and property tax out of this $50,000. In contrast Mitt Romney made 20 million dollars and paid 14% in capital gains. Guess which tax the Romney/Ryan plan wants to reduce to 0%? And they won’t tell us how they’ll pay for another 20% income tax cut for the rich. What are they hiding?
Don’t forget we still don’t know what is in Romney’s tax returns for the last 10 years; Paul Ryan had to submit 10 years to run for VP. What is Romney hiding?
Disabled veterans, seniors on Social Security, low income workers, college students, the disabled and active military are all included in Romney’s 47% about whom he said “they will never take responsibility for their lives” This was our glimpse at the real Romney. And not to be outdone, 2nd District Republican candidate, John Archer, raised the ante by saying “50% of the American population believes they are entitled to a government handout”, disparaging even further millions of proud Americans.
We need to vote for Obama and the Democrats who have demonstrated they will work for all Americans because we still are under a government “of the people, by the people and FOR the people”.
Once more (and I hope right up to the election) we have the thoughts of Larry Hodgden. Larry is a retired Viet Nam era veteran of the USAF. He and his wife of 40 years, Sharon, have three children and seven grandchildren who keep him very busy. Family, education, church and politics have been a lifelong passion.
Most of us expect that our elected representatives would be there to “represent” us. How can it be then that 235 out of 435 elected U.S. House of Representative members, nearly all Republicans, have signed onto Grover Norquist’s manifesto which vows not to vote for a tax increase under any circumstances nor will they vote for any elimination of a tax credit or deduction which would increase revenue even when it would be in the public interest.
Apparently that is more important to them than their oath to uphold the Constitution and serve the citizens they represent. This would explain why they nearly drove this nation into default last summer and have rejected every proposal to reduce spending by up to $10 for every dollar of new revenue. Imagine what that could have done to our deficit and debt as well as our economic recovery.
If you agree we need thoughtful representation in Washington, then we need to ask John Archer, Republican candidate in the 2nd District if he has or will sign the close-minded Norquist “no taxes manifesto” that forbids deliberation. I think we all know what he will do as today’s Republicans all march in lockstep with the party line or they don’t even get to run for office. He also brandishes the U.S. Constitution in his ads but cherry picks the parts he agrees with. Ask him where he stands on the 14th amendment which guarantees equal rights to ALL citizens.
A vote for Archer is a vote for the Ryan budget which would end Medicare, weaken Social Security and destroy the social safety net which so many of our neighbors, friends and family depend on to survive. Who among us does not know someone who depends on these programs? How will you explain to them your vote for Archer/Ryan?
It is painfully obvious that the Republicans in Washington D.C. do not have our Nation’s best interest in mind and are unwilling to compromise on any issue as exemplified by their killing a Veteran’s Jobs Bill and refusing to pass a new Farm Bill. What we don’t need is another Republican in Washington D.C.
Fortunately we have a 2nd District Congressman, Dave Loebsack, a Democrat from Iowa City, who works for and represents all of us. He takes seriously his oath of office and weighs every decision for what is in the best interest of Iowans in the 2nd District. Social Security, Medicare and the social safety net will be protected by Dave and he will continue to support investment in education, our infrastructure, small businesses, agriculture, clean energy and veteran’s services.
In a second term President Obama needs a Democratic Congress he can work with to get this country moving forward. You can be sure when you vote for and help elect Dave Loebsack, Democrat, as our 2nd District Congressman that he will be working hard everyday while “serving our interests”.
By Larry Hodgen
It might come as a shock to you, Governor Romney, that some Democrats actually pay income and other taxes and most of us don’t mind doing it. We know that by all of us paying taxes we are able to do things together that we could not do alone and meet needs that would not be met by charity or by the wealthy.
Needs like caring for our disabled and unemployed veterans who make up part of the 47% you classify as unworthy of your time. Like the millions of seniors who are surviving on Social Security after years of paying taxes. Like the 20 million children in this country who are undernourished. Like the unemployed who struggle to feed their families after losing their jobs due to the economic crash of 2008. Like low and middle class students trying to afford college so they can reach for the American dream. Like the parents working minimum wage jobs to keep their families together. Like the millions of disabled Americans unable to work.
Most of these people who do not pay income taxes actually do pay payroll taxes, sales tax, gas tax, phone and cable tax, property tax either directly or through their rent, and there are more. These people do not deserve to be treated by you like a “business write-off”.
If only you could outsource those 47% to China like you did with jobs while at Bain, then you and your friends who can pay $50,000 for lunch and fund your campaign with multimillion dollar contributions could win this election thus assuring yourselves of even greater wealth. Meanwhile the 99.9% of Americans who cannot afford $50,000 lunches can wait for your “Trickle Down” economic plan to reach us like you Republicans have promised for over 30 years.
It must be very uncomfortable for you to campaign and have to rely on the votes of people who you feel are so unworthy to be in your presence. Could this explain why you are unable to connect with the common people, because you have such disdain for them? Damn Democracy!
It may also surprise you that some of the 53% who pay income taxes and whose vote you desire might have a problem with your political agenda. Little things like some of us really like public education and appreciate teachers, some of us like clean air and water, some of us like good roads and bridges, some of us like,…. no, need,….. Medicare as it is, some of us like clean energy and worry about Global Warming, some of us want our friends and relatives to be able to marry the person they love, some of us want women to have unrestricted access to health care including family planning and some of us like the health care changes in the Affordable Care Act.
P.S. By the way, how much income tax did you pay in the last 10 years?
Once more we thank Larry Hodgden for sharing his thoughts. Larry is a retired Viet Nam era veteran of the USAF. He and his wife of 40 years, Sharon, have three children and seven grandchildren who keep him very busy. Family, education, church and politics have been a lifelong passion.
Once more we have a guest post from Larry Hodgden
Larry is a retired Viet Nam era veteran of the USAF. He and his wife of 40 years, Sharon, have three children and seven grandchildren who keep him very busy. Family, education, church and politics have been a lifelong passion.
This political fighting has got to end before we go “over the cliff”. I’ve never seen such extreme division between political factions and the obstinacy of one group precludes any opportunity for progress in solving our country’s serious problems. Yes, I’m talking about what’s left of the Republican Party and their Tea Party faction which is now calling the shots. How else can you explain the inability of House Speaker John Boehner to control his caucus and accomplish anything productive during this session of Congress? When he had the opportunity to strike a deal with President Obama on the debt negotiations, he was rebuked by his Tea Party members so now we’re faced with “going over the cliff”.
This Tea Party Crowd in Congress has made it impossible to compromise on any issue with their “No tax pledge”, regardless of the importance to the future of this country. A great example would be when Obama proposed infrastructure projects which would put people to work rebuilding our crumbling roads and bridges. If the Tea Party gets their way the Party platform will call for “cutting regulations” (that worked great under Bush), would “rein in the EPA” (who needs clean air and water anyway), and would “eliminate the Department of Education” (sure, let’s keep em barefoot, pregnant and IGNORANT).
Mitt Romney has already been pulled far to the right by the primary process and the Party’s ultraconservative base which is why he now wants to block access to Planned Parenthood, end a woman’s Right to Choose, stop men and women from marrying a partner of their choice, all of which he supported at an earlier point in his career. If Romney is elected, he will face the same problem presented by the Tea Party as President that John Boehner now faces as our Speaker.
As the former GOP (Grand Old Party) begins its convention it would be helpful to examine how far to the right this party has been dragged by its extreme elements. Even Ronald Reagan, who pragmatically raised taxes 14 times in his eight years, would not support the obstructionism shown by this crowd. From the 50’ through the 90’s, often with a divided government, Republicans and Democrats were able to work out legislative solutions to some very serious problems facing our country. Those days are over with the Tea Party holding the purse strings..
The moderate voices of the Republican Party have faded away. Gone are the days when Republicans like Eisenhower could propose an interstate highway system, when Reagan and Tip O’Neil, a Democrat, could agree on a solution for Social Security. I, for one, miss the old GOP. So now while the Republicans are going through this identity crisis, I guess we’re all waiting for an answer to the old game show question, “Will the real Republican Party please stand up?”
Today we have a guest post by Dave Hunt of Tipton. Dave is a retired educator and former Iowa Teacher of the Year.
Before we all end up “spitting through clenched teeth”, some clarification is needed. Republicans and Democrats agree with the idea of extending the Bush tax cuts for 98% of Americans. The debate centers on the top 2%, those earning from 250,000 dollars per year up to many millions.
Whether it’s called trickle down, supply side or aiding the “job creators”, there has always been the argument that by aiding the rich we aid the economy but the result is always the same; the rich get richer and the economy is not improved.
An M.I.T. study showed for every dollar given to the top 2%, the economic return is less than 1 cent. This is because without stimulus on the demand side which gets money to the average household, there is no incentive for the rich to invest and one can only buy so many yachts and mansions. Therefore the money ends up in places like the Cayman Islands and Switzerland so taxes can be avoided. It would be hard to argue that the rich need the money since they have done very well over the last 30 years. As of 2007 the top 10% had 50% of the total wealth in the country and the top 400 people had more wealth than the bottom 150 million.
Regardless of the projections, history shows us that raising revenue does not hurt job creation. After raising taxes Bill Clinton, a Democrat, created 21 million jobs in 8 years and delivered a budget surplus. Then came the Republican Bush Administration and after cutting taxes to aid the “job creators”, they generated just over 1 million jobs in 8 years. Two tax cuts, two unfunded wars and a change in Medicare part D turned a 236 billion dollar surplus into deficits and led to 4.9 trillion dollars of debt in 8 years while middle class household income fell $2,000.
Even though, the rich don’t need a tax cut, it doesn’t help the economy and the deficit goes up, Romney is doubling down on this very policy by proposing an additional tax cut on the top 1%. He also wants to eliminate taxes on capital gains, interest and dividends which won’t help moderate income families but would lower Romney’s tax rate to .82% on a 20 million dollar income.
Romney and the Republican Party are pushing tax cuts for the wealthy just as they are sounding the alarm on the deficit which they created and refusing to raise taxes to help solve the problem, all the while advocating deep budget and safety net cuts which harm the middle class and the working poor.
No, it’s not about class warfare though Warren Buffet admits his class is winning, it’s about making sure the system is not rigged to favor the 1%. Only then can we live up to the principle our country was founded on and reaffirmed by Abraham Lincoln in the Gettysburg address, “a government of the people, by the people and for the people”. He did not say “some of the people.”