Republican socialism

Our view : Giving middle-class Americans a tax break while asking the wealthy to pay more is a reasonable adjustment of Bush administration policies that have benefited the rich

October 21, 2008

It's hard to understand the logic of Sen. John McCain's charge that his Democratic opponent's proposal to cut taxes for Americans earning less than $250,000 a year is socialism. Sen. Barack Obama wants to redistribute the wealth by taxing the rich and giving to the poor, Mr. McCain complains. But a look at recent tax and income statistics tell a different tale. It is the rich who have been earning more and paying a smaller share of their income in taxes in recent years while middle-class and poor families have struggled with stagnant income and an unrelenting tax burden.

Truth be told, it's mostly wealthy investors who are enjoying the benefits of socialism these days in the form of hundreds of billions of dollars in government loans and investments designed to rescue banks and other financial institutions and avert a catastrophic failure. The U.S. government hasn't nationalized banks, but it has come close with its interventions and guarantees for eight big lenders.

When it comes time to help thousands of middle-class Americans in danger of losing their homes or jobs because of the fallout from the current financial crisis, Mr. McCain has been more cautious. He has opposed an extension of unemployment benefits as tens of thousands of Americans lose their jobs and proposed a home foreclosure bailout program that independent analysts say would benefit banks and other lenders more than hapless homeowners.

It's hard to understand just why some Americans recoil from the idea of tax equity. Billionaire Warren E. Buffett, the chief executive of Berkshire Hathaway and the wealthiest man in America, recently surveyed workers at his Omaha, Neb., headquarters and found that he paid far less than any of them as a fraction of his income in federal income tax and in payroll taxes for Social Security and Medicare.

Mr. McCain pledges that if elected, he will push to make permanent hundreds of billions in temporary tax cuts enacted during the Bush administration that have largely benefited large corporations and the wealthy. Then he promises to cut taxes some more. That's a form of welfare for the rich - socialism, if you will - that leaves ordinary Americans wondering how Mr. McCain will keep his promise to balance the federal budget without making damaging cuts in vital social programs. (He plans an across-the-board spending freeze.)

For the top 20 percent of Americans, the Republican tax cuts have worked, pushing incomes 9.1 percent higher over the last decade. But incomes dropped by 2.5 percent among the poorest fifth of families and have grown only 1.3 among the middle fifth.

Recent economic growth has failed to trickle down to benefit most Americans, and in the current turmoil, growing numbers of families fear for their economic security. The answer to their concerns clearly isn't Mr. McCain's vision that would starve the government while rewarding the wealthy. Another dose of that kind of inverted socialism is something that middle-class voters should fear.

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