David stockman was Budget Director for Ronald Reagan. On 60 Minutes last night he took both Republicans and Democrats to task for saying that somehow taxes can be reduced on anybody without disturbing our current pattern of spending. He was particularly on point when he talked about a one-time 15% surtax on the wealthiest Americans. On the surface that sounds a little unfair until you hear the facts about the growth in wealth of the top five percent of American households.
"In 1985, the top five percent of the households, wealthiest five percent, had net worth of $8 trillion, which is a lot. Today, after serial bubble after serial bubble, the top five percent have net worth of $40 trillion," he explained. "The top five percent have gained more wealth than the whole human race had created prior to 1980."
In other words, the taxing and deregulation policies over the last 30 years have generated tremendous wealth for the wealthiest Americans while leaving the rest of the population to struggling with stagnating wages and massive debt. This tremendous wealth was not generated because the top five percent were smarter or harder working that the rest. It was generated because the top five percent convinced the rest of the population to reduce taxes on the rich, treat capital gains differently than earned income, deregulate, i.e., get government regulators out of the way of financial speculation and mismanagement.
Whatever happens in the 2010 elections, the U.S. economy has an inherent inequality that must be dealt with. A return to past policies will only worsen this fundamental problem and continue to build the wealth of the top five percent while the rest of us languish. Eventually that top five percent might come to the realization that they cannot continue to build wealth if the rest of us cannot buy goods and services and thus increase demand. Of course, they could simply ignore that and look to foreign markets for their easy money.