None of the 2012 Republican Presidential Candidates Are Serious About Deficit Reduction or Stopping Redistribution of Wealth to the Wealthy

None of the 2012 Republican Presidential Candidates Are Serious About Deficit Reduction or Stopping Redistribution of Wealth to the Wealthy

The 2012 Republican candidates are largely in lockstep when it comes to economic policy, wanting to give huge tax cuts to the rich and corporations while doing next to nothing to boost consumer demand or help the middle class and the unemployed who have been battered by the Great Recession. In fact, according to an analysis by Citizens for Tax Justice, the average tax cuts received by the richest 1 percent of Americans under the Republican plans would be 270 times as large as the cut received by the middle class:

    The share of tax cuts going to the richest one percent of Americans under these plans would range from over a third to almost half. The average tax cuts received by the richest one percent would be up to 270 times as large as the average tax cut received by middle-income Americans.

Perry wins the award with a tax cut for the richest 1 percent that is 270 times larger than his middle class tax cut, while Gingrich’s is 190 times larger. Santorum and Romney pull up the rear with tax cuts for the rich that are 100 times larger than the cuts for the middle class, while CTJ did not analyze Jon Huntsman or Ron Paul’s plans. (CTJ uses a current law baseline, rather than a current policy baseline, to calculate its cuts. Using a current policy baseline, millions of middle class families would see a tax increase under Romney’s plan.)

CTJ also noted that “the cost of the tax plans proposed by Republican presidential candidates would range from $6.6 trillion to $18 trillion over a decade.” Therefore, “even the meager tax cuts that would go to low-income and middle-income taxpayers under these plans would almost surely be offset by the huge cuts in public services that would become necessary as a result.”

The conservative field of candidates are classic example of robbing Peter to pay Paul, or putting a little more money in one pocket of the middle-class and taking it out of the other. One of the results of progressive taxation is that a little bit of the extraordinary wealth accumulated at the top goes back to help pay for bridges, roads, medical research, firefighting equipment, public universities and so forth. All of those things and more will suffer even more budget cuts. For what? So multimillionaires and billionaires can hoard even more unearned income than they already have.

Much of the World, Including The U.S., Does Does Practice Capitalism, They Practice Greed

Much of the World, Including The U.S., Does Does Practice Capitalism, They Practice Greed

For those looking for signs of how globalization has woven the world into a web of unexpected vulnerability, 2011 offered a bumper crop.

An earthquake in Japan sent the global auto manufacturing industry into a conniption.

A flood in Thailand drastically reduced supplies of computer hard drives, forcing even a titan like Intel to swiftly reduce revenue forecasts.

State-subsidized solar panel production in China crushed a U.S.-subsidized solar start-up, thereby igniting a Washington political scandal.

It is child’s play to find further examples. The underlying reality is that unexpected consequences make everyone nervous. Sensibilities are on hair trigger. Just two weeks ago, the New York Times captured the new jitteriness in a single quote. In a story reporting how U.S. stock traders were increasingly setting their alarm clocks for the middle of the night, in order to absorb the latest news from Europe as soon as it started to break, one stock analyst, Michael Mayo, complains in a tone of bemused wonder: “Who would have thought we would have to be looking at Italian sovereign debt yields to figure out what Morgan Stanley’s stock will do?”
For those who haven’t been living and dying on every twist and turn of the European financial crisis, some unpacking of that sentence may be in order. Most modern governments routinely auction some form of state-backed bonds or other securities in order to raise cash. If the bond investors aren’t excited about the opportunity — let’s suppose, just for argument’s sake, that they’re afraid the Italian economy is about to collapse — then Italy must offer a higher interest rate, or yield, on those bonds to attract buyers. The higher the yield, the more negative the bond market’s judgment is assumed to be.

But for most of November and December, the health of Italy’s debt sales became not merely a judgment on Italy’s economic health and fiscal stability, but a swiftly translated proxy for investor sentiment about the state of all Europe. If Italy ran into real trouble, so the theory went, France and Germany would soon be swept into the vortex. And a European recession would obviously be bad news for the rest of the world. So one unsuccessful auction in Rome becomes immediate cause for bearish sentiment in New York and Tokyo and Shanghai.

And no one wants to be caught more than one nanosecond out of the loop. If the orders go out to sell or buy, you want to get there first. Since now, more than ever, bad news travels fast, everyone’s got to be quick on the trigger.

It doesn’t seem healthy, but we’re going to have to get used to it. Volatility and vulnerability are built into the infrastructure of our modern world. The jury may still out on the chaos theory question of whether a single butterfly flapping its wings in Botswana can cause a typhoon in the Philippines, but we now know without a shadow of a doubt that the relative success or failure of a troubled European government’s attempt to raise cash can send instant shock waves across financial markets across the globe.

And we know, intimately, that it doesn’t take much to set off a cascade of trouble — after the great global crash of 2008, traders everywhere are in a state of permanent PTSD. Beyond the obvious surface connections between markets — that European recession slowing U.S. economic growth — there are abundant linkages beneath the scenes that are obscure and hard to unravel, interconnections woven by complex derivatives and hedging strategies and computer-driven high-speed trading algorithms that instantly translate woe in one market to panic in another.

The inescapable conclusion: Our modern high-tech markets, in which more money than ever before swirls around the globe in a blink of an eye, are better at transmitting panic and fear than anything heretofore created by humans. If civilization is supposed to imply progress, then something has gone very awry: In the second decade of the 21st century, our infrastructure is increasingly fragile, increasingly prone to disruption. The sword of Damocles hangs above everyone’s head, and the thread that keeps it from falling is fraying perilously thin.

What is perhaps most fascinating about this state of affairs is how it has arisen as a consequence of global capital’s relentless quest for lower operating costs and greater efficiency and flexibility. The better we get at extending supply and production chains across the globe, the more vulnerable those chains become to a disruption at any given point. The faster we enable the transmission of information around the world and through the financial markets, the more volatile those markets become, as every new headline sends a different trading signal.

 If you want to fix this, guess what, according to right-wing conservatives, you're a socialist. If you want a capitalist system, a free market system that does regularly crush the middle and blue collar class, you're a stinking commie. In America we just do not have adult conversations about how to make things better because any talk of making things better, more fair, less catastrophic gets you labeled a communist. Do you hope your kids will live in a fair enlighetned societyand does not have to go through the economic insecurity you have to live with? Forget it. The powers that be have decided that greed is good. The powers that be have decided any attempt to bring back regulations like Glass–Steagall Act to protect average Americans is Marxism on wheels.

The Millionaires Who Act Like Scrooge and Those Who Act Like Patriots

The Millionaires Who Act Like Scrooge and Those Who Act Like Patriots

It's holiday season, and mean-spirited misers abound. GOP legislators have Dickensian plans for the 99 percent, aiming at shredding our social safety nets, undermining our healthcare, and making us pay for the financial crisis created by reckless financiers. Naturally, they decry even a modest income tax surcharge on millionaires, channeling Scrooge-worthy logic to justify their worship of Big Money at the expense of everyone else.

Meanwhile, JPMorgan Chase honcho Jamie Dimon, the highest paid executive among the six biggest and most dangerous banks, whines that he doesn't deserve our ire: "Acting like everyone who's been successful is bad and because you're rich you're bad, I don't understand it," said Dimon, whose 2010 take totaled $23 million.

Let us help you understand it. We don't hate you because you're rich, Mr. Dimon. Americans actually tend to admire people who make lots of money and, say, contribute useful things to society and promote the public good. Witness the recent outpouring of love for Steve Jobs. No, we itch for our pitchforks because you are greedy. You want to horde everything at the top and you refuse to acknowledge that you have any responsibility toward your fellow Americans. In fact, the way you make your money makes you look like a public menace. You dealt in risky derivatives and mortgage schemes that helped tank the global economy. You defrauded your investors. Your bank has even had the gall to foreclose on military families. Back in October, thousands of us stood outside your swank apartment on Park Avenue holding signs and telling you in plain English why your statements that bank regulations are "un-American" and such are both stupid and harmful. But apparently the message didn't get through. I guess we'll have to keep coming back until you do get it.

There are plenty of 1 percenters who support Dimon's view of the world, in which crushing ordinary people in the name of greed is something to be applauded.

But not all. And, like Warren Buffett, whose op-ed "Stop Coddling the Super-Rich" sent shockwaves through the country back in August, they are becoming more and more vocal. Philadelphia lawyer and philanthropist Dan Berger, a member of the Patriotic Millionaires for Fiscal Strength, has been hitting the airwaves and writing for months explaining why current tax policy unfairly favors the rich -- and why that's dangerous for everyone. Berger is concerned about the social pathologies and dysfunction created by the concentration of wealth at the top, and worries that we have unlearned the lessons of the Great Depression -- the last time such concentration devastated the country. "We are in a golden age of the cult of wealth," he warns. "Economic, social, and political life by, of, and for the one percent is an old story in the history of world civilization--one which inevitably ends badly."

Over the last decade, incomes for the richest 1 percent of Americans grew faster than that of any other group. CEO pay has soared 300 percent since 1990, while that of the average worker has risen a paltry 4 percent. If 1 percenters can't be convinced that such disparities are morally wrong, Berger suggests they conjure up some "enlightened self interest" in order to grasp what might happen if society becomes further unbalanced. He sees the Occupy Wall Street movement as the mere "tip of the iceberg."

Billionaire hedge fund manager Jim Chanos has also gone public expressing his support for Occupy Wall Street and his objection to tax policies weighted toward the 1 percent: "I have a problem with private capital asking for lower tax rates on certain forms of income that I believe are income, not returns on capital, than say teachers, soldiers, fireman and policeman.” Chanos explained to AlterNet why 1 percenters who can't see why Americans are angry are seriously out of touch: "They say we live in an 'aspirational society,' but many of those in the 1 percent accuse the Occupy Wall Street movement of class warfare and bemoan the fact that the president dubs them millionaires and billionaires. Well, I'm pretty sure most of the 99 percent would still aspire to be called the same thing!"

The aspirational dreams encoded in our American DNA have been increasingly crushed by policies and practices that channel money toward the top and leave students saddled with debt, workers struggling to support their families and elderly people unable to live in dignity.

We do live in a society that redistributes wealth. Every worker in America makes their contribution towards producing the GDP or Gross National Product. At the end of the day the pie (GDP) is divided up. The top one percent get most of the pie and the crumbs trickle down to everyone else. Conservative Republicans want you to believe that the top deserves it because they produce most of the work. Yep, hard to believe anyone would believe that mountain of BS, but many Americans do, just listen to Anti-American Fox News. They will be glad to tell you that supply-side trickle down economics is good and raising taxes just a little on the top is pure communism.

Because The American Middle-class Deserves a Future, We Are All Occupiers Now - The Mainstreaming of OWS

Because The American Middle-class Deserves a Future, We Are All Occupiers Now - The Mainstreaming of OWS

Perhaps the most significant mainstream supporters, though, are the only two most Americans have heard of. “Despite the Times’s finger-wagging that the movement is often muddled and misinformed, none of that is the point. The point is justice,” writes self-help guru Deepak Chopra, who visited Zuccotti Park and led meditations to help protesters turn “anger into awareness.” Suze Orman, who has made millions telling feckless consumers how to pay down debt and live on a budget, sounds like she’s channeling Naomi Klein: “To deride the movement because it has yet to formulate a well-delineated platform says plenty more about the critics than the protestors,” she wrote in the Huffington Post. “Revolutions tend to be messy, especially in the early going. The unholy alliance of much of Congress, K Street and Wall Street that has set the agenda from day one of the financial crisis is simply trying to protect its turf by casting aspersions on the ad hoc nature of the movement to date. I suppose I shouldn’t expect anything less. After all, there’s no way they could stage a substantive rebuttal based on facts.”

 After the New Deal, essentially starting Reagan America embarked on that great experiment known as trickle down or voodoo economics. That didn't work out so well for a middle-class that had enjoyed annual growth under New Deal policies. Time to correct course, start rewarding work instead of wealth.

Alleged ‘Skills Gap’ Takes Spotlight Off Who’s to Blame for Massive Jobs Shortageby Roger Bybee

Perhaps far too much attention has been devoted to the government role in job creation and retention, when American CEOs need to demand more from their employees and from the U.S. educational system to solve the jobless problem over the long term, this narrative suggests.

But in reality, this whole “Education, Training, and Skills” narrative serves to divert attention from the massive shortage of jobs and Corporate America's misdeeds to “failing” teachers and supposedly under-educated workers. Corporate America has failed to produce virtually any net gain in U.S. jobs since 1999; the period was the only decade when U.S. employment grew by less than 20 percent.

In short, the Education, Training and Skills "frame” on our economic problems plays several useful functions for the CEOs and the rest of the richest 1 percent. It takes the spotlight off CEOs' decisions to wipe out decent-paying job opportunities. As Gordon Lafer writes in The Training Charade,

    Workers are encouraged not to blame corporate profits, the export of jobs aboard, or eroding wage standards—that is, anything that they can fight—but rather to look inward for the source of their misfortune and the seeds of their resurrection.

Everyone, especially conservative loons like Herman Cain, Rick Perry and the conservative bloggers want America to blame anyone except corporate America for unemployment.

Taxes Are Not a Barrier to Job Growth

Taxes Are Not a Barrier to Job Growth

The new congressional committee on deficit reduction (the so-called "supercommittee") not only can consider revenue increases, but must consider them — as well as spending cuts — if it's going to produce a balanced plan. [1]

There are five main reasons why.

    Spending cuts alone can't do the job. The key fiscal policy goal is to reduce deficits sufficiently to stabilize the debt relative to the size of the economy. The only way to accomplish this without severe cuts that would hit low- and middle-income Americans hard — in areas ranging from Medicare, Medicaid, and possibly Social Security to basic assistance for the poor — and weaken core government functions like education, scientific research, and ensuring safe food and water, is through revenue increases.
    The 2001-2003 tax cuts are a significant contributor to projected deficits. Letting some or all of those tax cuts expire would make a significant contribution to reducing the deficit.
    Higher-income people can and should share in the sacrifices needed to reduce long-term deficits. Low- and moderate-income households shouldn't be forced to bear a disproportionate share of the burden through cuts in Medicare, Medicaid, Social Security, and programs targeted on people who are poor or near-poor.
    Taxes are low both in historical terms and in comparison with other countries. By either standard, the United States has significant room for increasing tax revenues.
    Higher taxes are not an inherent barrier to economic growth. In fact, the Congressional Budget Office (CBO) has said that tax increases used to reduce budget deficits can improve long-term economic growth and job creation. The experience of the 1990s shows that claims that reasonable revenue increases will sink the economy largely reflect politics and ideology, not solid analysis.

Spending Cuts Alone Can't Do the Job

The recent debt ceiling legislation (the Budget Control Act) calls for the Joint Select Committee on Deficit Reduction to propose, by November 23, steps to reduce the deficit by $1.2 to $1.5 trillion or more over the next ten years, in addition to the approximately $1 trillion in savings from reducing discretionary spending that has already been agreed to. Achieving this amount of deficit reduction solely by reducing spending would result in deep cuts in Medicare, Medicaid, and other federal programs, including programs targeted on the poorest Americans.

As a first step, the Budget Control Act has placed binding limits or "caps" on annual appropriations (which cover "discretionary" — or non-entitlement — programs such as defense, education, low-income housing assistance, national parks, the FBI, the EPA, medical research, and many others) that reduce projected funding for these programs by somewhat less than $1 trillion through 2021. Under these caps, CBO estimates, discretionary spending will shrink from about 9 percent of gross domestic product (GDP) in 2011 to 6.2 percent in 2021, "well below the 8.7 percent average over the past 40 years."[2]

Meeting those caps will pose a great challenge.[3] The federal government's responsibilities have grown in recent years, with developments at home and abroad pushing spending above the average for earlier decades. These responsibilities include medical care for veterans of the Iraq and Afghanistan wars, homeland security (in the aftermath of September 11, 2001), and education (with the federal government providing more resources to improve educational quality and outcomes). Additional discretionary funding is also needed to implement recent bipartisan Wall Street reform and food safety legislation and to provide adequate administrative funding to serve the growing numbers of Social Security and Medicare applicants as the population ages.

If the joint committee recommends less than $1.2 trillion in additional deficit-reduction measures, across-the-board reductions in spending would be automatically triggered to make up the shortfall. In 2013, about 85 percent of these automatic cuts would fall on discretionary programs, which would be cut by about 9 percent (if the committee achieves no savings) below the already-low levels mandated by the Budget Control Act caps. [4]

If the joint committee chose to reach its $1.2 trillion goal entirely through cuts in mandatory programs (such as Medicare and Medicaid), the cuts there would have to be harsh, as well. The deal that President Obama and Speaker Boehner were negotiating in July would have raised Medicare's eligibility age,[5] increased Medicare cost-sharing charges, shifted significant Medicaid costs to states,[6] lowered inflation adjustments in Social Security (and the tax code), and instituted a wide array of other entitlement savings, alongside revenue increases. Those cuts in entitlement programs would have saved $650 to $700 billion over ten years. To meet its target solely through entitlement cuts, the joint committee would have to produce cuts twice as deep as these — and roughly twice as deep as those in the plan of the "Gang of Six" senators and in the proposal by Fiscal Commission co-chairs Erskine Bowles and Alan Simpson.[7]

While policymakers will need to take additional steps over the long term to slow the growth of health care costs in the private and public sectors alike, the Affordable Care Act includes most of the good ideas we know now for slowing the growth of Medicare spending. Achieving large additional savings over the near term will therefore be difficult. Studies have shown that proposals such as replacing Medicare with vouchers that don't keep pace with health costs or raising Medicare's eligibility age would generally shift costs to beneficiaries, states, and employers — and in many cases, would increase total health care spending and thus add to the burden that high health care costs place on the economy.

This is why every recent bipartisan proposal, including Bowles-Simpson, the Bipartisan Policy Center panel chaired by Pete Domenici and Alice Rivlin, and the Senate's "Gang of Six," has called for a balanced package that includes both substantial budget cuts and substantial revenue increases. The report of a panel on deficit reduction convened by the National Academy of Sciences and the National Academy of Public Administration also concluded that putting the budget on a sustainable path without increasing revenues is likely to require large cuts in Social Security, very large cuts in Medicare and Medicaid, and cutting all other programs by about 20 percent overall (with deeper cuts in all other areas if one or more of these categories were protected).[8]

The joint committee needs to develop a balanced deficit-reduction package, including significant revenues, to reach its target. Only by proposing substantial increases in revenues can the committee avert automatic cuts in discretionary spending and overly harsh cuts in Medicare, Medicaid, and Social Security.
2001-2003 Tax Cuts Are a Significant Contributor to Projected Deficits

As recently as 2001, the federal government was running large surpluses, and CBO and the Office of Management and Budget were projecting surpluses for years to come. What explains the sharp deterioration in the budgetary outlook? Just two policies dating from the Bush Administration — the 2001-2003 tax cuts and the wars in Iraq and Afghanistan — accounted for over $500 billion of the deficit in 2009 and will account for $7 trillion in deficits in 2009 through 2019, including the associated debt-service costs. By 2019, these two policies will account for almost half — nearly $10 trillion — of the $20 trillion in debt that will be owed under current policies (see Figure 1).[9]

Although the temporary policies adopted to stabilize the economy and financial system during and after the recent recession added to budget deficits in 2009 through 2011, their effects will fade quickly thereafter, and they do not contribute much to the long-run budget shortfall. Nor are the projected deficits caused by a temporary large increase in discretionary spending instituted to respond to the recession. As noted, discretionary spending in 2011 is estimated to total about 9 percent of GDP — only slightly above its historical average even though some areas of discretionary spending are temporarily elevated now due to the wars and the Recovery Act — and is slated to decline markedly over the next decade.

Letting part or all of the 2001-2003 tax cuts expire would make a significant contribution to reducing projected deficits. Letting all of the tax cuts expire — as former Reagan economic adviser and Harvard professor Martin Feldstein, former OMB director Peter Orszag, and we (among others) have recommended — would save about $3.6 trillion over the next ten years, including the resulting savings in interest payments, and (in conjunction with the savings in the Budget Control Act) stabilize the debt-to-GDP ratio in the years ahead, which most economists consider the key intermediate goal for fiscal policy. Letting only the high-income tax cuts expire would save about $830 billion....

Of course this would be the sane approach. Yet Washington with the help of a media who only seems able to report the complexities of the latest sex scandal, seems sold on the insane idea that the U.S. can cut spending as the only road to economic recovery. We do not have a spending problem, we have a revenue problem and a lack of courage by conservative Republican to do the right thing.

More Than Ever We Need Revenue Increases Not Deficit Reduction

This article is prescient about our current situation, written just before the elections of 2008, Read My Lips: We Need These Taxes (Sunday, June 15, 2008)

Let's imagine an alternate universe. The U.S. government is running a large and growing deficit. Not far down the road it faces huge increases in Social Security and Medicare costs. Naturally, the candidates for president want to remedy this by raising revenue. They don't want us to bequeath bigger deficits to our children or stake our future on foreigners' willingness to keep lending us money.

But have you heard this speech? "My fellow Americans, I have a plan to raise taxes so that the budget will be closer to balance and future Americans won't have to worry about their retirement security." Neither have I.

Somebody, though, should be giving it. The U.S. budget deficit will be $400 billion -- or 3 percent of the gross domestic product -- this year, according to the Center on Budget and Policy Priorities. And it's growing. A gas-tax "holiday" (as advocated by John McCain) or a middle-class cut in the payroll tax (candy from Barack Obama) are pandering and will only make things worse. How would a conscientious president deal with the deficit and also make the system fairer? Here are five relatively painless ways.

1. End preferential treatment for private equity fund managers.

When you and I earn ordinary income, we pay a maximum rate of 35 percent in taxes. The max for private equity fund managers is 15 percent. This includes folks like Stephen Schwarzman, the head of Blackstone, whose net worth has been estimated at $7.8 billion and who (when he's not in St. Tropez or sundry other vacation digs) lives in the former Park Avenue apartment of John D. Rockefeller Jr.

Why do fund managers pay less? To encourage investment, the tax system charges a lower rate -- 15 percent -- on capital gains. No one objects to fund managers paying that rate on the profits they earn on their own capital. But here's the rub: Most of their profits come from investing other people's money. Typically, for every dollar their investors earn, the managers take a 20 percent cut. This is, in effect, a fee -- or ordinary income. Why shouldn't a Schwarzman or a Henry Kravis of Kohlberg Kravis Roberts & Co. be assessed the same rate on their fee income as anyone else? And since this wouldn't affect the people putting up the money, it would have no effect on total investment or economic growth. This change would raise only $3 billion a year, but on simple fairness, it's a must.

2. Raise the cap on the payroll tax.

Social Security is financed by a 12.4 percent tax, but it's assessed only on the first $102,000 of income. So people who earn more than that amount pay a lesser share of their total income. Warren Buffett, currently the richest American, has noted that his secretary is taxed at a higher effective rate than he is. Since income disparities are growing (the top 1 percent of earners took home 23 percent of all income in 2006, the highest total since just before the 1929 stock market crash), more and more income is escaping the tax. And Social Security needs the money: Its benefits will eclipse payroll tax revenues by 2017 (after that, the system will have to reclaim money it has lent to the rest of the government; eventually it won't have enough). Raising the cap would help preserve benefits. There are many ways to do this. Obama favors extending the tax on the wealthy -- perhaps on incomes above $200,000. More simply, we could raise the current ceiling.

3. Reinstate a meaningful
inheritance tax.

The Republicans won a rhetorical debate by labeling the inheritance tax a "death tax" -- the very phrase conjures up an image of heartless bureaucrats dragging the elderly from their beds to settle up, depriving them of their final moments of peace. In reality, the tax is paid not by the dying but by their living heirs. Prior to President Bush's tax cuts, which called for a gradual phaseout, the inheritance tax was levied only on estates worth more than $600,000, or 2 percent of the total. By next year, the floor will rise to $3.5 million -- at which point only one-third of 1 percent of estates will be taxed.

The tax is due to be repealed in 2010 -- and then restored in 2011 (a gimmicky flip-flop that Congress approved so that the projected deficit wouldn't seem astronomical). Congress is certain to revise the inheritance tax during the next administration. Reverting to half the pre-Bush level, as compared with total repeal, would net the government $40 billion a year.

The justification for this tax is that while the country allows -- and encourages -- citizens to accumulate great wealth on Earth, some of that fortune should be redirected to society once they enter the hereafter. The practical argument is also important: Repeal of the estate tax would be a death knell to charitable contributions and to this country's unique network of private foundations.

4. End unfair deductions.

First, the mortgage deduction. Sounds crazy, like banishing apple pie, right? But why should the government subsidize homeowners, who on average are far wealthier than people who rent? The home-mortgage deduction costs the United States more than $75 billion a year -- with half going to the richest 12 percent of taxpayers. And the evidence that it leads to higher home ownership is sketchy. More likely, it marginally raises home values. Given the real estate slump, propping up prices may seem like a good thing. But sooner or later -- as the recent crash should make clear -- prices return to their economic value anyway.

The mortgage deduction's true effect is to encourage people to borrow more on their homes. Haven't we had enough of that? A similarly unfair deduction, which McCain favors repealing, involves corporate health-care plans. If your company has a plan, you don't get taxed on the benefits. This costs the Treasury a whopping $125 billion a year and unfairly penalizes people whose employers don't have plans. Repealing these two deductions would eliminate almost half the deficit. Or the Treasury could replace them with a credit distributed evenly to all residents and all health-care consumers.

5. (Best for last): Repeal the Bush cuts in income and capital gains taxes.

They mostly benefited the wealthiest Americans, and this would save $2.5 trillion or so over a decade. The argument against the cuts hasn't changed, but now the evidence is in. In the 1990s, the U.S. economy boomed, and the government achieved a budget surplus. In this decade, growth has been slower; the surplus -- which the tax-cutters predicted would last indefinitely -- was gone within a year. Reversing the cuts (a step Obama and Clinton favor) would raise the top rate on ordinary income to 39.6 percent from 35 percent. It would also raise the capital gains rate to 20 percent. Wall Street frets that the latter would stymie investment. But the rate was 20 percent in the '90s -- probably the stock market's best decade ever.

I said that these hikes would be relatively painless. Since all taxes cost somebody money, you could say that every hike is painful. But not having money for retirement benefits or for health care for kids or for cities leveled by hurricanes or for defense and national security is also painful. The real questions should be: Would these hikes cause unfair pain to those being taxed, and would they cause more than marginal distress to the overall economy? The overwhelming answer is no.

The argument generally goes that these people who have astronomical high incomes did some did of special work to earn it. Really the guy who takes in a few million a year works harder than a scientists who discovers a treatment for heart disease. When we get above the working class in terms of pay, you have people who get more wealth simply because they already have wealth - working and earning the money is no longer part of the equation. Work produced is no longer how we measure productivity - at least for millionaires - each of us is different and uniquely talented, but our situations in life are only sometimes because of individual effort, the monetary rewards are frequently determined by as much by the structures and social conditions which the the rich and powerful have set in place. Taxes are a small compensation to pay for all the infrastructure and labor that helped make the rich rich.