Columns » Ernest Dumas

The class warfare debate

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When the Republicans accuse President Obama of engaging in "class warfare" by seeking to tax millionaires and corporations that dodge taxes, they frame the coming election in exactly the terms that the president and the Democrats ought to demand.

If Obama can't win that debate, he isn't Harry Truman, or Franklin Roosevelt or even Woodrow Wilson. William Jennings Bryan, maybe. They all fomented war between the classes, at least according to the GOP, and only Bryan, who ran to "honor God and please mankind," didn't prevail with the voters. Obama wouldn't even be Teddy Roosevelt or Dwight Eisenhower, who insisted against the tugs of their party that the rich and the trusts not be given special privilege by the government.

Deficits and the rapidly expanding national debt are the only issue for the Tea Party dominion that now runs the Republican Party. So Obama this week proposed slackening the debt growth by $3 trillion over the next decade, half of it by shutting down the Iraq and Afghan wars and embroidering on the Medicare and Medicaid savings in the new health-insurance law and half by restoring higher taxes on the richest Americans and closing tax loopholes for the most profitable businesses.

House Speaker John Boehner said the debt package had to be big cuts in Medicare, Medicaid and Social Security and not a dime more taxes on the "job creators," tax-dodging corporations and millionaires.

The president picked up on billionaire Warren Buffett's now-famous op-ed piece last month in The New York Times, in which he said people of vast wealth like him should be called on to make a greater sacrifice for the good of the nation. Obama's plan would require those reporting $1 million a year or more in net income to pay at least the same effective tax rate as middle-class Americans. In a 2007 speech in New York Buffett said he was taxed at 17.7 percent on the $46 million in net profits he made that year (a bad year for him) while his secretary, who earned $60,000, was taxed at 30 percent. A big venture capitalist calculated that he paid a lower rate than his cleaning lady.

Asked if that was engaging in class war, Buffett replied that it was indeed. That war has been waged since the 1980s, he said, "but it's my class, the rich class, that's making war, and we're winning." It was in the '80s, under Ronald Reagan, when the highest marginal tax rate was lowered from 74 to 28 percent and the tax burden was shifted more heavily to the working class in the form of higher payroll and excise taxes.

Senate Republican Leader Mitch McConnell called Obama's plan "class warfare."

But if fiscal and tax policy is class warfare on the Democrats' side why isn't it on the Republican side? Who will bear the cost of government and in what proportions are the essence of fairness and justice. It is the heart of every debate over tax reform, which the Republicans say they want to have.

Boehner said debt reduction must come about from shaving benefits from Social Security and the government health-insurance programs, mainly Medicare and Medicaid. Obama said he was willing to make big changes there but not if the elderly, poor and middle class were the only ones called upon to sacrifice.

He didn't carry the correlation far enough. Government-worker pension programs and Social Security taxes paid by the middle class made it possible for George W. Bush and Ronald Reagan to give the big tax cuts to the wealthiest Americans by soaking up roughly $3.5 trillion of the debt they created at near zero interest. Otherwise, we would owe another $3.5 trillion or so to communist China and the OPEC countries. Was that class war or merely surrender?

Obama ought to take a few pages from Truman, who endured the taunts of class war.

"I have told the people that there is just one big issue in this campaign and that's the people against the special interests," he said in the 1948 campaign. The special interests were the rich, Wall Street and the big corporations.

The national debt stood at nearly 120 percent of GDP, the accumulation of the Great Depression and World War II, which is much higher than today. After that campaign, Truman pushed through increases in the marginal tax rates in order to combat the debt growth. Eisenhower, who followed him, rejected his party's efforts to cut taxes. Finally, a Democrat, John F. Kennedy, set about to lower them when the depression and war debts were paid off.

The egghead Woodrow Wilson may be better suited than Truman to Obama. Here is Wilson's inaugural lament at the uneven sacrifice made by workers and the owners in the country's great industrial boom:

"We have not hitherto stopped thoughtfully enough to count the human cost, the cost of lives snuffed out, of energies overtaxed and broken, the fearful physical and spiritual cost to the men and women and children upon whom the dead weight and burden of it all has fallen pitilessly the years through. The groans and agony of it all had not yet reached our ears, the solemn, moving undertone of our life, coming up out of the mines and factories, and out of every home where the struggle had its intimate and familiar seat. With the great Government went many deep secret things which we too long delayed to look into and scrutinize with candid, fearless eyes. The great Government we loved has too often been made use of for private and selfish purposes, and those who used it had forgotten the people."

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