June 28, 2016

Mostly cloudy

You say you want a revolution? Well, you know …

By JOHN GLADDEN | Staff Columnist

We need a bloodless revolution. That’s the thought that occurs to me after hearing all the
speeches, commentary and debate about reviving the economy.

Most of the plans to jump-start American commerce seem to have one thing in common: The federal government pours money into the top of the economy and hopes it will trickle down to the bottom of the economy, where middle-class consumers and taxpayers live.

Somehow, we have managed to reverse the food chain. We could be putting money into the hands of everyday people to spend and invest on the idea it will drive businesses and banks and Wall Street back into profitability and create jobs, which in turn benefits our communities and the national treasury.

This could take the form of a federal tax holiday, giving a college education to anyone who wants one, offering serious incentives for buying renewable-energy cars and products, help for small businesses, and providing assistance to homeowners in trouble on their mortgages — thereby helping the financial institutions holding those debts.

Ronald Reagan gave trickle-down economics a false legitimacy. In 1965, the average CEO earned 24 times the average worker’s pay. As late as 1989, that number was 71. Today, the average CEO earns in the neighborhood of 344 times the average worker. Retirees have seen their investments shrink, while the moneychangers in the pillared temples of Wall Street get bailed out.

Ross Perot’s line about “the giant sucking sound” of American jobs being outsourced to other countries was prophetic. There was another giant sucking sound after the release of the first $350 billion bank bailout package. It was the sound of banks recouping their losses. Now we are poised to give them more. Will it trickle down in the form of new car and home loans for working people? We will see.

Changing the top-down, trickle-down, reverse-food-chain way of doing business is simple — simple in the way that moving a mountain is simple. The task is straightforward, but the job itself is Herculean.

First, we need to stop corporate funding of political campaigns. Federal representatives are surrounded by the wealthy and the powerful. They exert their influence through large campaign contributions and in some cases help write the laws that regulate — and we use that term loosely — their own industries.

In 2008 — in the midst of a financial crisis, mind you — the securities and investment industry, along with commercial banks, made $180 million in campaign contributions to candidates for the House and Senate. According to the Center for Responsive Politics, last year the financial sector gave each member of the House an average of $191,152. In the Senate, it was a cool $1.3 million each.

How much could you afford to donate to your candidate for the House or Senate? Maybe $25? Maybe $100?

Over the past 20 years, the financial sector has given $2 billion to candidates for federal office to be certain its interests are represented in Washington, making it the single largest contributing industry. Why is the financial bailout money being laundered through Wall Street and the big banks instead of through the people whose jobs, mortgages and 401(k) plans took the hit? One has to wonder.

Sens. Dick Durbin and Arlen Specter have offered an alternative to the current campaign finance system: the Fair Elections Now Act. Qualifying candidates who raise small donations from constituents would receive competitive matching funds to run for public office. It would be a start toward returning American politics to a contest of ideas, rather than a contest of money and influence.

The second thing we have to do is throw out the current federal tax code and replace it with a flat tax. This is abhorrent to those who have mastered the art of hiding their true income within the 67,506 pages of the U.S. tax code.

There is roughly a $350 billion “tax gap” of unpaid taxes each year. If the Treasury actually collected this money, we could have the stimulus package and the bank bailout paid off in five years. Instead, the money goes unpaid through a combination of honest mistakes and exploited loopholes. The complexity of the tax code is in large part responsible.

A flat tax would help level the playing field for the haves and have-nots, eliminating special-interest tax breaks and making sure the burden of funding the federal government is borne equally. That’s a tax concept even a Cabinet nominee could understand.

In the meantime, we have put our hope in largely top-down bailout and stimulus plans. Whether they work or not, now is the time for Barack Obama to spend his political capital on getting the money out of politics and the loopholes out of the tax code. Both would go a very long way in healing the economy, heading off the next crash, and returning power to the hands of the people. I don’t know about you, but that’s change I could believe in.

We need a bloodless revolution.

Who’s in?

Gladden may be contacted at gladden@ohio.net or 330-721-4052.