After five years of steady economic growth, how is it that most Americans are struggling to make ends meet? Amid record corporate profits and monumental payouts to America’s chief executives, how can wage gains for most of us remain stagnant? Why are the ever-rising costs of health care increasingly coming out of the take-home pay of the average worker?
The facts are indisputable. America’s middle class is in turmoil while top executives across the country enjoy ever-rising pay packages almost regardless of performance. Blue collar workers across the country face stiff barriers to annual wage gains that actually outpace inflation, in large part because of the failure of Congress to boost the minimum wage. Yet Congress is eager to foist so-called Health Savings Accounts on employees even though HSAs shift the cost of health care even further onto the average wage earner.
The Bush administration and congressional leaders are responsible for the economic policies today that leave so many of us wondering what’s going to happen when the economic cycle turns. Record federal budget deficits to finance tax cuts to the wealthy will only compound the pain. Progressives, however, can boast of pragmatic economic policy alternatives that would help most Americans weather an economic downturn and prepare them and our nation to compete in today’s rapidly globalizing economy.
Fixing what ails us begins with the tax code. Ignore conservatives who demogogue “tax and spend” liberals and consider how a comprehensive overhaul of the federal tax code would benefit most Americans and our economic prospects. We can ensure fairness and honor work by taxing each source of income according to a progressive rate structure—whether from dividends, capital gains, wages, or salaries—and restore simplicity to the tax code by reducing the number of income tax brackets from six to three at the rates of 15 percent, 25 percent, and 39.6 percent. In tandem we can ensure that about 70 percent of taxpayers earning under $200,000 a year earn a tax break. Check out the tax reform plan proposed by the Center for American Progress here and here.
Tax reform will take time, of course, which probably means congressional leaders will have to begin the effort when a new Congress convenes in January. But that doesn’t mean something can’t be done to help average Americans this year. When the current Congress returns for its final session in November it simply must vote to raise the minimum wage. And Congress should move swiftly on pension reform so that all Americans can enjoy the security of a comfortable retirement. To read about the Center’s pension plan reform proposals, please click here and here.
The Center for American Progress offers a range of economic policy prescriptions that progressives in America consider essential for the economic well being of all of us and our country as a whole. And our Economic Mobility Intiative is one of a number of efforts we’ve launched to create a better economic future for American families. To learn more about proposals, please go to the Domestic and Economy pages at center-for-american-progress.vipdev.lndo.site or talk with our experts.
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