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UYGUR: President Obama‘s plan for reducing the deficit will introduce a topic that‘s sure to make last week‘s wrangling seem like a love-fest. That‘s because Obama‘s expected to call for tax increases for the wealthiest Americans, and they‘re not going to like that.
And that‘s a problem for Republicans, because they think our lopsided tax system is fair. In fact, they think it should be more lopsided. They‘re proposing massive tax cuts. Again. That‘s on top of the Bush tax cuts.
Just listen to Speaker Boehner.
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REP. JOHN BOEHNER (R-OH), HOUSE SPEAKER: Washington has a spending problem. It doesn‘t have a revenue problem.
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UYGUR: They always say that, and it‘s just an assumption. But it‘s nowhere near reality. The reality is that we have a massive revenue problem.
But undeterred by reality, Paul Ryan‘s plan would lower the top tax rates for individuals and corporations from 35 percent to 25 percent. The plan would bring the tax rate on high earners down to its lowest level since 1931. And the Tax Policy Center puts the revenue lost from a Ryan‘s plan to $2.9 trillion over the next decade. That doesn‘t help the deficit. It hurts the deficit by 2.9 trillion. You know what? That money has got to come from somewhere. How do you think they make up for it? By taking it from the poor and the middle class, of course. Look at this graphic from Robert Greenstein of the Center on Budget and Policy Priorities. He shows that two thirds of the spending cuts come from programs that help lower-income Americans, programs like Medicaid, food stamps and low-income housing. Now, that doesn‘t sound like shared sacrifice to me, so how does the GOP spin this one?
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UNIDENTIFIED MAN: We‘re in a situation where we‘ve got a safety net in place in this country for people who frankly don‘t need one. We have to focus on making sure we have a safety net for those who actually need it.
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UYGUR: That‘s amazing, now I might be wrong, but by cutting Medicare and Medicaid, the GOP is actually taking away the safety net away from people who do need it to create a safety net for the people who don‘t need it, but this is GOP 101. They are constantly trying to rig the system for the rich. Remember, just this December, the Bush tax cuts were extended for two more years. It cost the government $900 billion. And a quarter of those savings went to the top one percent of Americans. Let me just repeat that. Top one percent of the country.
Quarter of $900 billion, and now they say they got to have spending cuts from you. But by increasing the tax rate on the rich, of course, it could ease the pressure to make the sort of cuts that Paul Ryan is suggesting, and it‘s not unprecedented. Look at his graph, it shows that the top marginal tax rate was 50 percent in the mid 1980s, when Ronald Reagan was president, and much, much higher in the 1950s, the golden age of America. And remember when President Clinton had the higher rates? We created 22 million jobs.
Joining me now is former Clinton Labor Secretary Robert Reich, he‘s now professor at UC Berkeley. His latest book is “Aftershock,” and is now available on paper back. Look at that.
All right. Secretary Reich, first of all, is the team in Obama administration misreading the Clinton legacy? Is there something that you know, because they are saying, OK, we have to be centrist like you guys were, is there something wrong with that? Or do they have it right?
ROBERT REICH, FORMER LABOR SECRETARY: Well, the big thing wrong with it Cenk, is that this is not like the mid 1990s. A lot of people are hurting, we are still in the gravitational pull of the great recession, it‘s very difficult to get out. We‘ve got, you know, 13 and a half million people unemployed. We‘ve got six million people who have been unemployed for six months or more. You know, the economy is not buoyant. I mean, you don‘t have to be a rocket scientist or have a Ph D to understand that this economy is really in trouble. And if we actually make major cuts in programs that are important to the middle class and to the poor, make major cuts overall, we‘re going to be actually slowing economic growth down and slowing the creation of new jobs.
UYGUR: And I love the point you made in one of your articles, where you said, look, the reason Clinton got reelected was because we were creating 400,000 jobs a month. Not be because Washington thought he was more centrist. And I think that‘s a really available lesson. But to the point on taxes, we can also talk about the Clinton experience there. Now, there was a higher tax rate for everybody, for the rich, but also for the rest of us. It did create 22 million jobs. Is that the right way to go here? Should President Obama go further and say, hey, we just got to go back to those rates, period?
REICH: Look it, I don‘t think there‘s any choice, Cenk. I mean, most Americans in polls show that they are in favor of a millionaire‘s tax. They know, they‘re not stupid, they understand that the alternative, the only alternative of cutting Social Security and Medicare and education and roads and bridges, and everything we need is to raise taxes, and most people can‘t afford to pay more in taxes, as so who can‘t afford to pay more in taxes? The rich who have been getting a steadily larger percent of total income in this country. Look back over the past 30 years, you know, the people around the top one percent, they doubled their share of national income. Doubled. If you‘re in the top one-tenth of one percent by income, you‘ve tripled your share of national income. And yet through that whole period, your tax rates, and I‘m talking about income taxes, estate taxes, capital gains taxes, those tax rates keep on going down.
UYGUR: You know on Friday‘s show, we showed people a piece from Bloomberg business week that showed for the top 400 earners in the country, their effective tax rate has gone down to 17 percent, which is a lot less than what we pay, which is unbelievable, right? And now.
REICH: That‘s main by.
UYGUR: And let me just also add to that, they‘re doing better and better. The top CEOs, their pay went up this year by 12 percent. And now the average, you know, CEO for the top 200 major companies makes $9.6 million. It‘s absurd to say that they can‘t pay the tax.
REICH: Of course it‘s absurd. Look, I think it‘s a matter of patriotism here as well. Cenk, if you were taking home a bigger and bigger slice of the economy and you‘re paying less and less in terms of your tax rates, and you‘re imposing the costs on everybody else. Well, are you really being patriotic? Are you really fulfilling your responsibility to this country? I would say possibly no. I mean, Wall Street is doing better than ever. As you said, CEOs are doing better than they were doing before the recession, but most Americans are doing worse than they were doing before, and they are certainly in trouble—we are in a financial crisis right now, we‘re in an economic crisis, and the rich have to pay their fair share.
UYGUR: Secretary Reich, one last quick thing, maybe if we just ask them in the form of a trick question. If we asked the Republicans, would you be willing to agree to the tax rate, that the last republican president who balances the budget had, maybe they would go for that, and of course the answer to that is Dwight Eisenhower, and what was his tax rate? Was it 90 percent, 91 percent?
REICH: Well, it‘s 90, the marginal tax rates on top comes under the Dwight Eisenhower administration, and nobody would have accused Dwight Eisenhower, a republican, former general, of being a socialist, the top marginal income tax rate under Dwight Eisenhower was 91 percent. And the economy did well. In fact it was doing better in the three decades after the Second World War than it‘s been doing over the past decade.
UYGUR: You know, Rachel Maddow once said that she is a liberal, which means that she pretty much agrees with the Eisenhower administration, right?
REICH: Who would have known? Who would have known?
UYGUR: That‘s how much the spectrum has shifted in this country. But Secretary Reich, we always enjoy the conversation. Thank you for joining us tonight.
REICH: Thanks, Cenk. Bye-bye.