It might not be your idea of leisurely reading on a long weekend, but at some point you've really got to get to John Cassidy's New Yorker article on the scary erosion of progressive taxation -- and how much worse it's likely to get in the event of a second Bush term. A sample:
Roughly two-thirds of taxable income is paid to workers in the form of wages and benefits. The other third goes to reward capital, or accumulated savings, in the form of corporate profits, dividends, and interest payments. If Bush's economic agenda was fully enacted, the vast bulk of these payments wouldn't be taxed at all, and labor would end up shouldering practically the entire burden of financing the federal government. In a new book, "Neoconomy: George Bush's Revolutionary Gamble with America’s Future," Daniel Altman, a former economics reporter for the Times and The Economist, describes what such a system might look like. "The fortunate and growing minority who managed to receive all their income from stocks, bonds and other securities would pay nothing -- not a dime -- for America's cancer research, its international diplomacy, its military deterrent, the maintenance of the interstate highway system, the space program or almost anything else the federal government did.... Broadly speaking, that fortunate minority would be free-riders."
Cassidy's point is that this is already happening, gradually -- as Bush chips away at the estate tax and capital gains taxes and the like.
This is what worries me about a second Bush term more than the Patriot Act or additional wars -- the likelihood that, when the dust settles, every single member of America's middle class will be paying taxes at a higher rate than every billionaire. I think this is a formula for unimaginable deficits if social programs aren't drastically cut, or for a return to the Victorian era -- massive inequality, children sleeping under bridges -- if they are drastically cut. Read the article. It really could happen.
Meanwhile, Floyd Norris noted in yesterday's New York Times just how bad the Bush years have been for private-sector wage earners -- worse than under any president since Kennedy:
In the area people think of when they hear about personal income - wage and salary payments - the picture is not as pretty. The entire increase there comes from the government payroll. Adjusted for inflation, private industry is paying almost exactly the same as in 2000. To be precise, private spending on wages is up less than 0.1 percent.
No administration back to John F. Kennedy has done as poorly. The two that came closest - a 1.4 percent rise under the first President Bush and a 3.3 percent gain in the term that ended with Gerald Ford in the White House - each ended with incumbents losing the election.
(Though I guess if you complain about this, you're an economic girly-man.)
The main point of Norris's column is that under Bush -- despite the fact that he's a member of The Party That Hates Government -- the only significant increase in total (inflation adjusted) wages and salaries has been in the government sector. Think all those delegates in elephant-trunk hats this week knew that?
John Cassidy notes in The New Yorker that anti-tax types close to the president -- the Club for Growth, Grover Norquist -- are pushing for "halving the size of federal spending, from twenty per cent of G.D.P. to ten per cent." But Bush is doing no such thing -- he's just cutting taxes. How high can the deficits go? How much can debt can we foist on future generations?