The Washington Post with Bloomberg have a brief article,  Who Raised The Debt Ceiling, with a very interesting graph.

Notice the rise of the debt start to rollover under Clinton. The Republicans may have had control of Congress at the time, but the leadership fought Clinton tooth and nail. They claimed his raising tax revenue would kill the economy and increase the deficit. Clinton got his way anyway with almost all the Democrats and a few Republicans voting for what he wanted. History tells us Clinton was right and the Republicans who fought him were completely wrong.

From the post 1993 Deficit Reduction: a Lesson on Tax Policy by Charles M. Kelly, I selected the following part.

1993 Deficit Reduction: A lesson on taxes, economic growth, and jobs—as reported by America’s premier CONSERVATIVE financial daily news publication:

     Conservative politicians always threaten the public that, if Congress or the President raises taxes on the wealthy, the economy will slow down, unemployment will go up, and workers’ wages will go down.

     Conservatives’ hidden agenda: we want to allow our wealthy supporters—the ones who benefited most from the economic policies that forced huge sacrifices onto American workers during the 1980s and 90s—to be able to keep more of their money.

     Reality: Raising taxes on the wealthy is much more likely to reduce the deficit and make more money available to proactively solve America’s problems—and save money in the long run. In addition, it may have absolutely no negative effect on economic growth, jobs or wages.

     Here’s what conservative politicians said about the 1993 deficit reduction legislation that raised taxes on the top 1.2% of our wealthiest citizens:

“Clearly, this is a job-killer in the short-run. The impact on job creation is going to be devastating.”

—Rep. Dick Armey, (Republican, Texas)

“The tax increase will…lead to a recession…and will actually increase the deficit.”

—Rep. Newt Gingrich (Republican, Georgia)

“I will make you this bet. I am willing to risk the mortgage on it…the deficit will be up; unemployment will be up; in my judgment, inflation will be up.”

—Sen. Robert Packwood (Republican, Oregon)

“The deficit four years from today will be higher than it is today, not lower.”

—Sen. Phil Gramm (Republican, Texas)

“The President promised a middle-class tax cut, yet he and his party imposed the largest tax increase in American history. We hope his higher taxes will not cut short the economic recovery and declining interest rates he inherited… Instead of stifling growth through higher taxes and increased government regulations, Republicans would take America in a different direction.”

—Sen. Robert Dole (Republican, Kansas)

This opinion piece,  The President Is Missing, by Paul Krugman was brought to my attention by LlandaR. In the article Krugman says:

What’s going on here? Despite the ferocious opposition he has faced since the day he took office, Mr. Obama is clearly still clinging to his vision of himself as a figure who can transcend America’s partisan differences. And his political strategists seem to believe that he can win re-election by positioning himself as being conciliatory and reasonable, by always being willing to compromise.

I can believe that Paul Krugman is on to part of the problem, but I think that the bigger problem is that President Obama does not understand the situation and the stakes.  That is why I have called for an intervention from economists such as Krugman, Kuttner, Stiglitz, Galbraith, Romer, Reich, etc.  They have to find out what Obama understands about the damage that highly unequal wealth distribution does to the chances for an economic recovery.  If he doesn’t understand the issue, how can he be expected to take a strong stand?

Earlier today, I posted the graphic that shows Wealth and Tax Distribution. While the wealthy top percent or so do earn an inordinate fraction of the income, the Republicans point out that they pay an even higher percentage of the income taxes. However, the Republicans never tell you how income does not include such items as unrealized capital gains.  That is why I felt a measure of wealth versus taxes was a better indicator of the disparity.

Another post I made today, The L Curve Of Income, points out that:

In Bill Gates’ best year he increased his net worth by $50 billion!

Now the naysayers are going to claim unrealized gains don’t count because they could go away almost as easily as they came.  It is true that there is year to year volatility, but the long term average increase in the value of the American stock market is on the order of 10% to 12% per year.  So the wealthy may have their ups and downs, but all they have to do is invest in an index mutual fund to make an average of 10% to 12% a year in increased wealth.  As long as they leave it unrealized, they pay no taxes on it.

You hear conservatives tell you that the wealthy pay a larger percent in taxes than their income would merit. What you don’t hear is that a lot of their increase in wealth is not counted as income. I thought I would try to find a plot of wealth versus taxes. Here is one example that I cannot vouch for, but since it is in nice colors, it must be true.

Wealth -Tax Distribution

I decided to get graphic. The online version allows you to zoom in and out.