When I first heard that President-Elect Obama was “considering” rescinding his campaign pledge to reverse the Bush tax cuts on the wealthy, I hoped that he wasn’t really serious about that. But the more I hear about it, the more I have come to believe that he does indeed intend to rescind that campaign pledge.

But why announce that he’s “considering” it, rather than wait until he makes a decision on the matter, and then announce it? My best guess is that he announced his decision to “consider” the matter as a trial balloon, to see what the response will be. If the response is negative enough, loud enough, and well-reasoned enough, perhaps he will reconsider the idea in a light more consistent with the principles upon which he ran his campaign.

That being said, here are 7 reasons why I am very disappointed that he’s even considering the issue, and will be a lot more disappointed if he actually reneges on his campaign promise:


# 1 – We need the money

I don’t know exactly how much money is involved in this, but I know that it’s a hell of a lot. An analysis by the Center on Budget and Policy Priorities estimated that the Bush tax cuts cost our nation approximately $400 billion a year, not including debt service. Think Progress cites a cost of $3.5 trillion over ten years, based on Congressional Budget Office figures. And the Economic Policy Institute places the figure at $5 trillion over ten years. According to any of these estimates, if the Bush tax cuts run for an additional two years, between the time that President Obama is inaugurated and the time that they are set to expire in 2011, it will cost our nation somewhere between $700 billion and $1 trillion in revenues. The vast majority of those tax cuts are for the wealthy – the group for which Obama promised to reverse them if he was elected President.

Obama’s campaign website contained numerous very impressive and much needed plans for strengthening our country, which tens of millions of voters compared favorably with McCain’s plans. These included investments in education, investments in alternative energy development, making health care affordable for all Americans, protecting social security, strengthening our cities, and alleviating poverty. In addition, Obama pledged to work to reduce our massive national debt, which now stands at more than $10 trillion.

All of these things will cost a great deal of money. When asked during the presidential campaign how he would pay for all his programs and provide tax relief for the working and middle class without adding substantially to our national debt, reversing the Bush tax cuts on the wealthy was always a major part of his response.

How will all these things be paid for if Obama doesn’t follow through with his pledge to reverse the Bush tax cuts on the wealthy?


# 2 – Extreme income and wealth inequality is bad for the economy

Income and wealth inequality have risen substantially since the “Reagan Revolution” beginning in the early ‘80s, and the rise has been even steeper during the Bush administration. As of 2006, the Economic Policy Institute estimated that more than a third of the wealth in the United States was held by the top 1% of households, while less than a fifth was held by the lower 90%. That means that the average top 1% household held almost 200 times as much wealth as the average lower 90% household.

What does this mean for our economy? Well, there was one other time in U.S. history when income inequality was almost as bad as it is now. That was the late 1920s, just prior to the Stock Market Crash of 1929 and the Great Depression. An article by Gabriel Thompson in The Nation contains a graph titled “Plutocracy Reborn – Re-creating the Gap that Gave us the Great Depression”. The article contains a chart that portrays the situation graphically, plotting over time the income ratio between the top 0.01% of U.S. families and the bottom 90%.



The ratio rose from about 250 at the start of the 1920s to a peak of about 900 by 1929. The ratio then plunged, and by the start of WW II it had declined to about 200, where it remained with some relatively minor ups and downs until the beginning of Ronald Reagan’s Presidency. It then began another precipitous climb, with a sharp decline beginning during the last year of Clinton’s Presidency, but then another sharp increase beginning at about the time that the Bush tax cuts for the wealthy first went into effect, so that by the end of 2006 we’ve exceeded even the peak ratio of 1929 that preceded the Great Depression.

Why is extreme income inequality so bad for the economy? I have a rather simple-minded way of looking at it: When income and wealth inequality are extreme, it is almost as if the wealthy are living in a different economic universe than the vast majority of other people. They think nothing of spending vast sums of money that the rest of us will never see in a lifetime of work. Under such conditions, those who produce things – the housing industry, for example – have much more incentive to put all their efforts into producing things for the rich than for other people. Consequently, most other people tend to get priced out of the market.

Here’s a more sophisticate explanation, from FDR’s Chairman of the Federal Reserve, explaining the relationship between wealth inequality and the onset of the Great Depression:



# 3 – Extreme income inequality is bad for democracy

The reason why extreme income inequality is bad for democracy shouldn’t be difficult to understand. Extreme wealth allows a small number of people to exert a very disproportionate influence on our elections and legislative process.

There are now about 35,000 lobbyists in the United States. Corporations pay those lobbyists about $2 billion in salaries and spend another $8 billion to “influence” legislators to help to enact favorable legislation. In many if not most cases, the legislation in question, while benefiting the corporation, will do so at the expense of most everyone else.

Thus there has developed in the United States an unholy and symbiotic alliance between government and corporate power, whereby our government acts in behalf of corporate interests rather than in behalf of our interests, in return for the bribes that keep them in power.

Bill Moyers explains the situation in a straight forward manner. He made the following comments during a speaking tour titled “Saving Democracy”, in California in February 2006, and reprinted in his book, “Moyers on Democracy”:


Since the Telecommunications Act of 1996, increasing control over the news media has provided another powerful tool for a very small group of wealthy telecommunications owners and executives to exert highly disproportional control over the political process, by virtue of the slanted news they provide to the U.S. electorate. The utter failure of our corporate controlled news media to tell the American people the truth about the Bush administration lies that propelled us into an unnecessary and illegal war against Iraq is just one example of this.

Thus it is that we have a vicious cycle of increasing income inequality and declining democracy in our country. Extreme income inequality allows the rich to exert extraordinary influence over the legislative process and the news that we receive, which tilts our nation’s laws even further in their favor, which provides them with ever more money and opportunity to maintain control over our government.


# 4 – Extreme income inequality is unfair

Conservatives defend economic inequality by arguing that it is fair to reward those who work the hardest, are the most productive, and who take the most risks. They say that these are the people who create wealth for everyone, so they ought to be rewarded for their hard work, productivity, and risk taking, which benefits everyone by making the whole economic pie bigger.

I most certainly agree that people ought to be rewarded for hard work and creating things that are of use for society. But where is the evidence that the rich (say, the top 1%) work 200 times harder, produce 200 times as much, or take 200 times as much risk as 90% of the rest of us? I’ve never seen such evidence, and it is inconceivable to me that it exists.


# 5 – There is no good reason to postpone reversing the Bush tax cuts on the rich

The primary reason that Obama gives for allowing the Bush tax cuts for the rich to stand is that we are in a recession – the implication being that high taxes on the rich are bad for the economy during a recession. This message has been loudly proclaimed by our corporate news media as well. But there is no evidence for that claim. Again, let’s go back to the Great Depression of the 1930s to look at the evidence on this issue:

The top marginal tax rate stood at a meager 25% when FDR was inaugurated in 1933, during the height of the Great Depression. FDR progressively raised the top marginal tax rate, as can be seen in this graph, to 63% in 1932, to 79% in 1936, to 88% in 1942, and to 94% in 1944.

Did that destroy our economy? Let’s just say that when FDR was elected in a landslide victory in 1932, the most important campaign issue by far was the economy. It was obvious that his prospects for reelection would largely depend on what happened with the economy. Following FDR’s huge tax increases on the rich, he won re-election in 1936 by a popular vote margin of 61% -36% and an electoral vote margin of 523-8, in 1940 by respective margins of 55%-45%, and 449-82, and again in 1944 by 53%-46% and 432-99.

The top marginal tax rate remained at 70% or more for several decades after FDR’s death – a period that Nobel Prize winning economist Paul Krugman describes as “the greatest sustained economic boom in U.S. history”. Then, in 1981 came the “Reagan Revolution”, large tax cuts for the rich, and increasing income inequality which accelerated to unprecedented levels during the Bush II administration.

It is also important to understand that we have seen a very strong inverse relationship in our country between top marginal tax rates and income inequality, as seen in this graph.


# 6 – Republicans will use this to their political advantage and to confuse us

With all of Obama’s talk of bipartisanship, some might think that right wingers would be appreciative of his efforts. But others would not be surprised to learn that they are preparing to use his possible about-face on this issue as an opportunity to pummel him and advance their disreputable ideology. Here is one example:


In other words, the implication is that it was obvious to Obama all along that he couldn’t increase taxes on the wealthy during a recession, but he persisted with his promise to do so in order to win the election. This will be a twofer for them: They can simultaneously bash Obama and resurrect the phony talking point that taxing the rich during a recession is bad for the economy.


# 7 – I will consider this a breach of promise

Obama’s promise to reverse the Bush tax cuts on the rich was a major part of his Presidential campaign. Here is a typical statement he made on this issue:


I and many others repeatedly used this as a selling point to convince moderates to vote for Obama. We considered his stance on this issue not only to be well-founded and necessary, but courageous as well. It exposed him to accusations of class-warfare and socialism, which Democrats in recent decades have been intent on avoiding. Yet he withstood the onslaught with exceptional skill and courage, and he won a landslide election victory.

The excuses that he now gives for considering allowing the Bush tax cuts on the wealthy to stand until they expire in 2011 do not wash – on two accounts. First of all, we were already in a recession during the 2008 campaign, and it seemed quite clear that things were getting worse. Not that much has changed between the Presidential election campaign and Obama’s reconsideration of his Bush tax cut reversal pledge.

Secondly, it seems inconceivable to me that Obama or his economic advisors actually believe, in the absence of any supportive evidence, that tax cuts for the wealthy during a recession are bad for the economy. Yet they seem perfectly willing to accept the right wing talking points to that effect. That is very disappointing to me.


Final thoughts

Why would Obama do this? His campaign pledge to reverse the Bush tax cuts on the rich was wildly successful, beyond all expectations. He received unprecedented amounts of campaign contributions from small donors, proving that he didn’t have to rely on the big moneyed interests in order to run a successful campaign. What is going on here?

Progressives in our country have seen ferocious resistance to their policies, and they have lived through a lot of disappointments. The attempted coup against FDR was unsuccessful, and it was followed by several decades of liberal domestic progress.

But there was the coup of November 1963, the assassinations of RFK and MLK, and the October Surprise of 1980 which facilitated the election of Ronald Reagan and George H. W. Bush. Then there was the stolen election of 2000, the bizarre 9/11 attacks, the untimely fatal “accident” of Paul Wellstone in 2002, and the stolen election of 2004. And there has been much more.

All of these events have led many of us to feel that there are so many dark things going on in our country that we don’t know about, and that are controlled by forces that we have only the vaguest understanding of. Many of us wonder how much strength, skill and courage a U.S. President would need to resist these forces.

But enough of my paranoia! Barack Obama was elected President, and presumably he was aware of all these things before he made the decision to run. Now it is up to us to let him know how we feel about his reconsideration of his campaign pledge. That is probably the only thing that might lead him to reconsider his original pledge in a favorable light.