TRUTH BE TOLD
Reagan-era tax cuts for the wealthy, anti-union animus set the stage for today's deficits
By MARTY O’CONNOR
The governor’s Executive Budget for 2010-11 has been released. With the “leaks” that preceded the formal release there were no major surprises. This budget, like previous budgets, contends the fiscal problems New York state faces are caused by overspending, not declining revenues.
This is the narrative of the wealthy, the corporations and, increasingly, both major political parties. The roots of this argument can be traced back to 1981. That was the year everything changed. Ronald Reagan was sworn in as president and his “trickledown” economics and anti-union and anti-public sector policies took root.
Two actions changed the course of this country. First, he cut taxes on the wealthiest Americans. Second, he fired the striking air-traffic controllers and hired replacement workers (scabs) to do their jobs.
Striking Professional Air Traffic Controllers Organization (PATCO) picket in 1981.
When Ronald Reagan took office on January 20, 1981, the highest wage earners’ tax rate was 70 percent. By the time he left office in 1989, the rate had dropped to 28 percent.
Before the Professional Air Traffic Controllers Organization (PATCO) strike, union density in the U.S. was 23.3 percent. By 2007, it was down to 12.4 percent. However, union density in the private sector is considerably lower. By 2009, it was 7.2 percent.
The combined effects of the tax cuts for high earners and the firing and replacement of the PATCO strikers set in motion forces that have had a tremendous effect on the distribution of wealth in the U.S. In the period after World War II and until the election of Ronald Reagan, the share of total income going to the top 10 percent of wage earners hovered around 33 percent. Today, it is close to 50 percent.
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