What Recovery? Economic Growth is Anemic

In our previous article – Progressive Taxation: Not on Hillary’s Agenda – we touched on the laundry list of proposals the Democratic front-runner was offering to help fix the economy. Many were good ideas – others like implying it is OK to tax millionaires and secretaries at the same effective rate – not so much.  We don’t need a laundry list of great ideas – we need a basic acknowledgment that something is fundamentally wrong – and that it needs to be fixed.

EconGrowthByDecadeVer1What’s wrong is that the rate of economic growth is this country has been slowing over time to the point where it is barely keeping up with population growth. As shown in the above graph, from an average growth rate of more than 4% in the 1950’s and 1960’s, the rate of growth slowed in the decades from 1970 until 2000 to just over 3%, then slowed again to an average of under 2% since 2000.

The big issues of our day – lack of good jobs, stagnating wages and income inequity all stem in part from the fact that our economy is not keeping pace. How does the U.S. compare to other countries? What are some of reasons behind stagnating growth? And how do we fix our broken economy? These are some of the issues we will be discussing in upcoming editions of The Democratic View.

Progressive Taxation: Not on Hillary’s Agenda

Hillary Clinton’s economic policy speech this past Monday at the New School of New York was a laundry list of progressive proposals– like raising the minimum wage, strengthening worker protections, social security and health care and investing more in infrastructure and early childhood education. See a video of her speech c-span.org.

HillaryClintonEconomicSpeech

Photo credit: http://blogs.newschool.edu/news/2015/07/hillary-clinton-economic-vision/

It was a speech, however, that was long on great ideas but short on specifics –for example how will she raise the revenue needed to implement all the initiatives she’s outlined.

It is one thing to talk about “tax reform” and another to detail specific revenue raising proposals.

Mrs. Clinton did talk about closing corporate loopholes and eliminating the special treatment of “carried interest” on profits paid out to executives and fund managers.

But these might best be described as nibbling at the edges of tax reform. When it came to broad-based reforms of the kind needed to pay for her many initiatives, Mrs. Clinton came up woefully short:

“… those at the top have to pay their fair share. That’s why I support the Buffett Rule, which makes sure that millionaires don’t pay lower rates than their secretaries. “

It’s a sad commentary that the best the Democratic front runner can muster is to say that millionaires should not pay lower rates than their secretaries.

Whatever happened to the concept of progressive taxation?

Have we forgotten a core Democratic principle – that people who earn more and benefit more from our economy should pay a higher effective tax rate?

Apparently we have, since virtually no one took Mrs. Clinton to task for effectively saying it is OK to tax millionaires and secretaries at the same rate.