Paying For Tax Cuts At The Top By Cutting Pensions For The Rest

By Dave Johnson

Created 02/17/2010 - 11:03am

Today's new York Times has a front-page story (really an editorial) [1] that promotes cutting the Social Security pensions of Americans and other things that we as citizens are entitled to.

Many analysts say the president and Congress could send a strong signal to global markets by agreeing this year to a package of both long-term tax increases and spending reductions, especially in the popular entitlement programs, that would not take effect until 2012.

Let's remember how we got here.

For decades following the depression and WWII the country had operated with a budget that was in or nearly in balance while maintaining our infrastructure and investing in our future. Past concentrations of wealth were decreasing, the middle class was expanding, and we led the world in growing prosperity.

The trouble all started when we dramatically cut taxes on the rich. For decades the top tax rate was 90%. Then we cut it to 70% and then 50% dramatically from there all the way to around 30%. The budget immediately went completely out of balance. The tax cuts created a "structural deficit."