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?
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UPDATE: From a CBS account of the debate:
Rep. Peter DeFazio, D-Ore. denounced the "trickle-down" economics behind the bill ....
He also said the golden parachutes for executives were merely switched for "camouflaged parachutes."
DeFazio's focus on "trickle-down economics," which mirrors Obama's recent emphasis on a Republican "economic philosophy that has completely failed," is spot on.
In order to ready the country for the type of fundamental economic change necessary to right the ship, we must build a national consensus that the entire trickle-down Republican philosophy (not just George Bush's philosophy) is, quite simply, a joke.
To that end, allow me a shameless plug for my forthcoming book -- Yeah, Right: "This Economy Is Strong" and Other Tall Tales -- which will be released next week (October 6), and can be pre-ordered on Amazon. It's my small contribution to the larger effort to build a national consensus about the widespread failure of Republican economics.
The book is a collection of the many short-sighted and out-of-touch claims made in recent years by Republican politicians and their corporate supporters, including Bush, McCain, Palin, Limbaugh, Cheney, Rove, Paulson, Gramm, Greenspan, Corporate CEOs, Mortgage Lenders and more. Yeah, Right juxtaposes those rosy statements with news reports and economic charts revealing the grim facts facing most Americans, leaving no doubt about the dramatic disconnect between Republican rhetoric and economic reality.
Here's the front cover: