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Sunday, October 23, 2016

By forcing Republicans to admit their support for Wall Street over working families, Van Hollen’s proposal opens the economic debate the Democrats need.

Rep. Chris Van Hollen’s (D-MD) proposal to tax Wall Street speculators and CEO millionaires to put money in the pockets of working families and the middle class, the engines of our economy, is a political and economic home run. It allows Democrats to focus on economic growth and fairness at the same time, sharply defining the debate on the key question voters ask: “Which side are you on?”

Leading politicians from both parties are all expressing sympathy for the stagnant prospects of the middle class. If you need evidence, here is Jeb Bush sounding like Elizabeth Warren: “Millions of our fellow citizens across the broad middle class feel as if the American Dream is now out of their reach … that the playing field is no longer fair or level.”

Where the two parties split – and where the core debate that will define the next two years and the 2016 election lies – is on who is to blame and what to do about it.

Americans believe we need economic growth, but they are more likely to place the blame for stagnant wages on the super-rich and powerful who game the system at their expense. That is why they told pollsters they prefer “an economy that works for all of us, not just the wealthy” over “growing the economy” by 22 points.

Van Hollen claims both grounds – growth and fairness. As he says, “What our country needs is a growing economy that works for all Americans, not just the wealthy few.”

The heart of the plan is providing a $1,000 tax credit for workers, phased out as income rises, along with an additional $250 tax credit when workers save. He would pay for that by taxing Wall Street speculation (with a tiny financial transactions tax) and closing loopholes that allow millionaires to pay lower taxes than average people.

It’s clear that this is great politics: taxing Wall Street gambling and the super-rich to put more money in the pockets of working families and the middle class.

Republicans tell another story, placing the blame for middle-class woes on government and focusing on lowering taxes and cutting government regulation to grow the economy. In opposing the Van Hollen proposal, they are forced to defend the wealthy and deny tax breaks to the middle class, as we saw from Speaker John Boehner’s spokesperson’s comment opposing the Van Hollen plan.

This is the economic argument Democrats want to have. Republicans say we grow the economy by taking the side of the Wall Street banks that wrecked the economy and the corporate CEOs who cut our wages and shipped our jobs overseas. Democrats say we move the economy forward by putting more money in the pockets of working families and the middle class.

Van Hollen adds another proposal, which is also brilliant politics and sharp economics. He would not allow corporations to get tax breaks for million-dollar executive pay unless they shared the rewards of soaring corporate profits with their workers. Van Hollen accomplishes this by proposing to end corporate tax deductions for executive compensation of over $1 million, unless the corporation’s wages are raised enough to keep up with worker productivity and the cost of living. Another way that corporations could deduct higher executive pay is by providing employees with ownership and profit-sharing opportunities.

With this proposal, Van Hollen puts the focus squarely on the corporate behavior that has driven down wages and crushed middle-class aspirations. His proposal would boost worker income, which drives the economy forward. When Republicans oppose this, the choice will again be clear to Americans: CEO millionaires or working families.

As Van Hollen recognizes, his proposal is not the complete solution to creating an economy of broadly shared, sustainable prosperity. He recognizes the need to raise wages and job standards, which directly turn today’s low-wage, economy-busting jobs into economy-boosting jobs. He reinforces the necessity of investment in infrastructure, research and education.

It will be important to do all these things. We need to raise wage standards and strengthen the ability of workers to organize, to make sure that every job pays enough to care for and support a family in dignity. It is essential that we make huge investments in transportation, clean energy, communications, and research to build a powerful economic foundation for the future. That investment will take revenues, which can be raised from closing corporate loopholes, raising tax rates on the wealthy, or other progressive tax measures. We can also discuss whether some of the revenues Van Hollen raises would be better spent on infrastructure rather than tax breaks for upper-middle-income people.

Simplicity is key to political communication. In its simplest terms, Van Hollen is saying that we drive the economy forward by putting money in the pockets of working families and the middle class, not Wall Street and the super-wealthy. And then his proposal invites Americans to ask their elected officials: “Which side are you on?”

If Democrats around the country are willing to stand up to their big campaign contributors and ask that question with such a powerful proposal in 2016, they will triumph. And in triumphing, they will move the country toward an America that works for all of us, not just the wealthy.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

Cross-posted from the Roosevelt Institute’s Next New Deal blog.

The Roosevelt Institute is a non-profit organization devoted to carrying forward the legacy and values of Franklin and Eleanor Roosevelt.

Photo: Talk Radio News Service via Flickr

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  • TZToronto

    Right from the start, this idea is doomed. That’s not to say that it has no merit, only that it’s doomed. But that’s not the point, of course. The point is to make Republicans admit that they (1) have no plan to help the middle class and (2) have no intention of developing a plan to help the middle class in any way. Their only plan is to lower taxes on the wealthy, to remove any and all barriers to gambling depositors’ and investors’ money on schemes designed to fail from the start (so that taxpayers will have to come to the rescue of scamming Wall-Streeters), to privatize all social programs so that their friends on Wall Street can steal money from beneficiaries of the programs before running those programs into the ground, and to start wars to support the military-industrial complex while sending the children of middle-class families off to die in foreign lands. Now, what Democrats have to do is point out incessantly that Republicans in Congress and in the states have shown, though their opposition to middle-class-friendly ideas, that they are interested only in enriching their already-rich buddies and want, no, expect the middle class to fail, all the while supporting, through their taxes, the people who are stealing their money and destroying their dreams.

    Of course, Republicans in Congress could surprise everyone by working to see that Van Hollen’s ideas get to see the light of day (and the President’s desk). Remind me not to hold my breath for that, please.

    • Bill

      Great comment but you forgot to mention the GOP’s new math to hide their explosion of the debt with even bigger tax breaks for the rich at the expense of the poor. They only care about the debt when they are not in power, are the American people ever going to wake up to these people and their policies?

    • … then send up the white flag? Quit? Stop fighting? The problem, as
      this & every other Mid-Term election have shown, the over-dosing of
      bickering, squabbling & name calling in the months, weeks &
      days B4 elections having emotionally drained the electorate only works
      for ONE demographic – the lawless elites who also – coincidentally – are
      the ONLY demographic that benefited during the lead-up to, the actual
      economic collapse & subsequent post-DEPRESSION of 2008 consequences,
      of which we’re still trapped in TODAY!!! Tell me I’m wrong?! U’d be
      awful stupid to complain NOW (not ‘U’ specifically of course, as a voter
      U’r self), when representing 51% of American voters who DIDN’T EVEN
      BOTHER to vote this last election
      We’ve been over this enuff to get intellectually sophisticated enuff
      to turn off the noise, do the homework & vote as if we OWN OUR
      DEMOCRACY!!! As in WE THE PEOPLE & vs those poised to gut
      everything from Social Security to the Environment & who suffers?
      Who profits? Read HERE
      to UNDERSTAND what happened REALLY on 12/11/00, when our Democracy was
      forced underground & unable to recover in any way, from that bizarre
      & now-terrifying event. To clarify, refer to –
      Chemerinsky_BOOK-2.pdf – Adobe Reader – for greater confirmation of just
      how ‘…political & ideological…’ the 12/11/00 SCT decision
      ACTUALLY WAS, showing the hell unleashed on the world as a result of
      conservative ideology. Begging the question, what is Rep. VanHollen
      REALLY asking of US & demanding of his colleagues?

      • TZToronto

        All I mean is that Republicans in Congress (and the red states) will do everything they can to derail proposals to help the middle class if it means raising taxes on the wealthy and large corporations.

  • Dominick Vila

    Tax reform, and trade, are likely to be two areas where common ground is going to be achieved during the next two years, but the fight is going to be bloody. The GOP is going to focus on corporate tax reform, and President Obama is likely to join them. Democrats in Congress are likely to make concessions, but not without something in return. The GOP focus is going to be on helping corporations, highlighting the fact that employees will benefit when their employers realize high profits and grow (trickle down), Democrats will fight for lower tax rates for the middle class and the poor, pointing out that more money in the pockets of middle class people translate to higher spending and economic growth. Hopefully they will settle somewhere in the middle…

  • Bill Thompson

    Van Holden’s proposal has great merit but be forewarned. I can hear the GOP’s Rebuttal now, Democrats now want to raise taxes on your investments. Now they want to raise taxes on 401(k)s and people with fixed incomes. The Democrats want to strangle incentive to grow corporations. The real problem is the same problem, the Democrats have little or no strategy particularly among their leadership. The Republicans control the narrative, the Democrats at best come out with a weak rebuttal too little too late.
    As for the infrastructure there is little doubt in my mind that the Republicans will be forced to visit this initiative. It will give them the opportunity to look like they are the people that are getting something done. The only problem is every jobs bill that comes out will have anti-labor legislation attached to it. Republicans have been chipping away at federal and state legislation over the years, for example the Davis-Bacon act. The Democrats will find themselves in the position of opposing infrastructure initiatives or supporting anti-labor legislation. Similar to the budget bill where Democrats voted for the elimination of portions of Frank -Dodd legislation regarding the publics protection against future bank bailouts. The budget bill also contains language that will allow pension funds in an “endangered” status to cut the benefits of their pensioners.

    • Dominick Vila

      I doubt the GOP will introduce anti-labor legislation in any Bill. If nothing else because the “right to work” movement is alive and well, and has silenced organized labor. That, by the way, is one of the most important reasons for the growing financial inequality that exists in the USA, and for the large number of low paying – part time jobs – jobs we have at a time when our economy is on solid grounds and creating jobs. Without a voice, workers in “right to work” states take whatever crumbs they can get, and they accept the circumstances because of the effectiveness of a brainwashing campaign that convinced them that any legislation or attempts to improve their lot is an evil concept called socialism that they must fight at all cost.
      In any case, the real question for me on the issue of investment in infrastructure is the scope of that initiative. If it is limited to fixing pot holes and repairing bridges, it will not make too much of an impact on our decaying infrastructure. We must focus on issues such as scarcity of potable water, diverting water to areas where aridity is affecting our farmland, making our power grid more effective, protecting low coastal areas from rising sea levels, etc. Our country – and the American people – would benefit from those improvements, in addition to providing jobs for those who have been left behind. As to who gets the credit, who cares?

      • Bill Thompson

        Dominic thank you for your thoughts but we live in alternate universes. I know labor In Florida has been squashed, but here in New York labor still has a pulse. As a Unionist I can assure you I follow the republican legislations quite well Davis-Bacon is always on the agenda. In republican states ALEC simply writes the legislation and the governor implements it, In almost every case Davis-Bacon is on the agenda. For those that do not know what Davis-Bacon is among other things it is Prevailing wage legislation and you’re right it really doesn’t matter in right to work states. Right to work is simply the right to work for less, you get what you vote for. I wish I had your optimism but for me the GOP will never miss an opportunity to lower wages and squash the middle class. Unfortunately our little debate will become a reality in the next two years either way respectfully Bill.

    • If Americans are too dumb to be able to read (the Constitution) & understand the essentials behind taxation & competent, functional government, so be it! But this is a conversation between an elected representative & the people. If the people are too lite-weight in the brain to engage & advocate for themselves – i.e., supporting EQUATABLE TAXATION for THEMSELVES as well as the RICH & CORPORATIONS, it means they’re (the Middle & exploding working Poor classes) just fine w/carrying the ENTIRE weight of taxation (which by the way, is crushing their ability to sustain themselves on paltry incomes & ZERO wealth growth CONTINUOUSLY for the last 13 CONSECUTIVE YEARS!!!) they deserved to be man-handled, exploited & beaten-down by the lawless, out-of-control elites VanHollen is referring to. Can the rich & corporations SOLELY support & keep afloat the ENTIRE US economy? Do the math, PLEASE!!! He’s SPEAKING to voters who don’t UNDERSTAND JACK about DEMOCRACY! If ‘simplicity’ is the key here, the Congressman is TRULY on the mark…

      • Bill Thompson

        In case you haven’t noticed the game is rigged benefits go to the very wealthy, middle-class takes it on the chin. Make no mistake 50% of the population voted against it’s own best interest because of social issues social issues the GOP utilizes so well. The GOP’s stranglehold on the conservative right regarding religion and social issues has put us where we are presently today. It is not about the rich supporting everyone it is simply about putting the money the rich hold back into the economy. Lower and middle-class citizens spend most of their income what little expendable income that is left is usually used for entertainment, the rich simply hide it. As for simplicity the GOP has been using that strategy for 40 years it works quite well.

  • Robert Morris

    A default is only triggered if Obama’s regime chooses to not pay interest on the debt. Reference the 14th Amendment. Debt interest payments are only about 10% of US Government revenue. Therefore, the only way they would not be paid is if Obama’s regime chooses not to pay them

  • Whatmeworry

    Other then this blog and MSNBC no one cares

    • Sand_Cat

      Obviously you don’t. Or maybe you do, but you just can’t tell the truth about even that. If no one cares. why did you bother?
      Or on second thought, even if you care passionately, no one does.

      • Whatmeworry

        I don’t believe in the truth

  • Wizz Key

    We have a single mission: Defend our sacred Constitution.