by Jim Oleske
Mon Sep 29, 2008 at 11:34:00 AM PDT
We have been here before.
In 1932, during the final year of the Hoover Administration, Republicans and Democrats agreed that immediate action needed to be taken to confront an economic crisis. The crisis they agreed upon was not the Depression's day-to-day impact on ordinary Americans, but instead, the need for new revenue in the face of a soaring budget deficit.
The initial proposal was a regressive sales tax. It had bipartisan support among congressional leaders, but prompted an unexpected popular revolt. Here's a description from historian Robert McElvaine's book,
The Great Depression (pp.86-87):
Given the bipartisan support, some sort of sales tax seemed certain. But one quarter has not yet been heard from: the people.... A large number of Americans perceived that "the interests" were trying to substitute the sales tax for income and corporate taxes....
An unprecedented volume of mail poured into congressional offices. The events of March 18-24, 1932, in the House were truly remarkable. Prompted by the largely spontaneous outpouring sentiment from their constituents, congressman rebelled against their leaders.
After the sales tax was defeated, Congress instead enacted
the Revenue Act of 1932, a progressive tax measure that more than doubled the tax rate on top incomes, doubled the estate tax, and raised corporate taxes by almost 15 percent.
The Revenue Act of 1932 laid the groundwork for the progressive income tax system that prevailed in America for the next 45 years, as we built the largest middle class the world had ever known under Roosevelt, Truman and Eisenhower (Ike rebuffed appeals from his fellow Republicans and kept top marginal rates above 90%).
So here's the question: what's the progressive opportunity presented by the defeat of today's bill?
Is it making Wall Street pay for Wall Street's own bailout by enacting a tiny transaction tax on Wall Street trades, as proposed by a group of
House Democrats led by Oregon's Peter DeFazio?
Is it tough regulation, including a resurrection of Glass Steagall?
Is it both?
Brad DeLong suggests:
September 29, 2008
...and go for the Swedish plan: nationalize the insolvent large financial institutions: dare Bush to veto that after the election.
Vote Count:
Democrats: 141 Yea, 94 Nay
Republican: 66 Yea, 132 Nay.
This Republican Party needs to be burned, razed to the ground, and the furrows sown with salt...
Republicans are engaging in
demagoguery, smack them dowm.
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