Lately, whenever I hear Majority Leader Eric Cantor open his mouth, I look around for something to throw at him. The man never tells the truth. And the lies he tells are particularly infuriating. Here he is telling us that Republicans, a.k.a. Job Creators, really want all of us to make more money.
“We know in this country right now that there is a complaint about folks at the top end of the income scales, that they make too much and too many don’t make enough,” Cantor said during an appearance on Fox News Sunday, toning down his earlier criticism of the Occupy Wall Street protests.
“We need to encourage folks at the top of the income scale to actually put their money their work to create more jobs so we can see a closing of the gap,” he added…
…Republicans “are about income mobility,” Cantor said as he tried to make the case that the GOP was best equipped to spread the wealth. “And that’s what we should be focused on to take care of the income disparities.”
Cantor fell short of apologizing for calling the protesters “angry mobs” last week. Still, he did not accept host Chris Wallace’s challenge to stand by his comment against a movement that 54 percent of Americans rate positively according to a recent Time poll.
“I think more important than my use of that word is the fact that there is a growing frustration out there across this country (that) too many people are out of work,” he said. “But … we have elected leaders in this town who frankly are joining in an effort to blame others rather than focusing on the [Democratic] policies that have brought the current situation.”
Republicans want to “promote income mobility and not excoriate some who have been successful,” Cantor said. “We want success for everybody.”
Let me start out by saying that Democratic policies did not cause our current unemployment situation. But the issue is income disparity. Take a look at this chart that lists the top marginal income tax rate for every year since the federal income tax was introduced in 1913. The top rate in the 1940’s and 1950’s was never below 80 percent. Right now it is 35 percent. Under Republican President Dwight D. Eisenhower and Democratic President John F. Kennedy, the top rate was never lower than 91 percent. Why is that important?
I’ll tell you why. If you are a Board of Directors that is trying to decide how much to pay your CEO, are you going to be interested in giving him a whole bunch of income when 91% of it is going to go straight to the government? No, of course not. Until the emergence of the stock option as a form of executive compensation, high marginal tax rates kept a lid on the potential income disparity between the people in the executive offices and the people in the mail room. In the 1980’s, rich people figured out that they could award each other vast sums in stock options, which would theoretically act as an incentive for CEO’s to run their companies well so that the stock price would go up, they could exercise their option, and then they could buy a really big boat. In reality, it just gave them an incentive to always take the short-view, hoping to quickly boost the stock price, make a windfall, and then move on to the next challenge.
But the stock option wasn’t the only trick they came up with. They also capped the long-term capital gains tax rate at 15%, which is considerably lower that the 35% marginal tax rate CEO’s face on ordinary salary income. Why give your CEO more salary that will be taxed at 35% when you can give him more stock options that will be taxed at 15 percent?
About that 35 percent? They brought the marginal tax rate down to 70% (Nixon), 50% (Reagan), 31% (Reagan), and 39.6% (Clinton), and finally to the 35% (Bush II) rate, where it remains today. To be sure, not all of these cuts were equal. The second Reagan tax cut eliminated massive loopholes and didn’t represent as big of reduction as it might seem. But all of these changes made it more attractive and affordable to offer ever-bigger compensation packages to senior executives.
Of course, more pay is more pay, whether you distribute it equitably or you lavish it only on senior management. With increasing global competition, there is great downward pressure on the price of labor. And that is precisely why the Republican Party hates labor unions and anyone who makes labor more expensive. These fat cats keep telling us that we have to renegotiate our contracts, give away our pensions, trim our benefits, or they’ll have to lay people off. Or maybe they’ll just move our jobs to India or Indonesia or Mexico. Yet, they never trim their own ballooning salaries or fail to interfere to prevent a higher tax burden for themselves.
Eric Cantor doesn’t want people to make more money. That’s a crazy idea. He wants labor costs as low as they can possibly be. And that’s on a good day. Right now, he doesn’t even want people to be paid poorly. He wants them not to be paid at all. He wants high unemployment because he hopes it will hurt the president’s reelection prospects.
yet, he has the gall to say that his party wants income mobility. Whatever he’s pretending to mean by that, the truth is that he wants your income to go into rich people’s pockets. That’s about all he wants.