During the campaign, Obama promised to end the Bush tax cuts on the rich. In late November, he started waffling:

A member of the Obama economic advisory team, William M. Daley, acknowledged that because of the gravity of the situation, Mr. Obama was leaning toward letting a Bush tax cut for the wealthy expire on schedule in 2011 rather than repealing it sooner.

And this from a press conference on December 11:

And I have not made yet a determination in terms of how we’re going deal with the rollback of the Bush tax cuts for the wealthiest Americans. That’s part of the charge that I’ve given to my economic advisers working in concert with our health care team.

The other morning on Scarborough, the new person at CNBC’s morning show told us that pay cuts are already happening at big companies because of economic stress. So, she said, it probably won’t be necessary to raise taxes to correct the income disparities that even she admitted are a problem.

This is from the Saturday’s NYT:

The biggest question is whether Barack Obama will go ahead with his plans to increase income and capital gains taxes on affluent families — those making $250,000 a year or more — soon after he becomes president. With the economy in such trouble, he may decide it’s better to delay any action.

Rolling back the Bush tax cuts for the rich is a promise Obama must keep. It’s a matter of fundamental fairness. The repubs promised that if we cut taxes on the rich we would see a blast of investment that would bring in new revenues and budget surpluses. Instead, we got steadily rising deficits under Reagan and Bush I, followed by improvement under the fiscally disciplined Clinton administration:

Reagan added $1.94tn to the National Debt
Bush I added $1.16tn to the National Debt
Clinton subtracted $14.2bn from the National Debt

And then we got Bush the Incompetent, who, through December 17, has added a staggering $4,927,775,329,129.06. To top that off, the Wall Street moguls Bush served so well wrecked the economy. Much of that $4.92tn is the direct result of the stupid policies adopted by the incompetent administration at the direct request of Wall Street and its legions of lobbyists bearing campaign contributions.

Only one group benefited from these policies. The income of the top 1% has risen dramatically since 1980. Look at the results of Berkeley economist Emmanuel Saez and Thomas Piketty of the École Normale Supérieure in Paris, the leaders in this area. They define income as “the sum of all income components reported on tax returns (wages and salaries, pensions received, profits from businesses, capital income such as dividends, interest, or rents, and realized capital gains)”. They exclude government transfers like social security.

There is criticism of their work, some of which is described by Yves Smith, but to me the critic’s arguments smell like they were bought and paid for.

The share of income of the top 10% of households is fairly stable at around 33% from about 1950 to 1980. It begins to rise under Ronald Reagan, and continues to rise steadily through 2006 (the most recent data available), when it reaches 50%. In 2006, you were in the top 10% if you earned $104,700, and in the top 5% if you earned $148,400.

The rise for the top one percent is even more shocking. This group gets 10% of all income during the early Reagan years, and then they really start raking it in. By 2006, this tiny group, whose worst off member got $382,600, gets 23% of all income. Practically all of the growth in the top decile comes from the steep rise enjoyed by the richest 1%, as shown by Saez’ Figure 2.

Ian has made this point, that gains from productivity are going to the very high income people, and not to the workers. Saez provides the following information about the growth of real annual income in his Table 1.

Period Average Income Growth Top 1% Growth Bottom 99% Growth
1993-2006 1.9% 5.7% 1.1%
1993-2000 3.7% 10.1% 2.4%
2002-2006 2.8% 11.0% 0.9%

Edited and reformatted, footnotes omitted.

The chart shows what we all know: Democrats are better for most Americans than repubs, and this whole idea of trickle-down benefiting everyone is just wrong. In the Clinton years, the income gains to the top 1% were just four times greater than gains to the bottom 99%, compared to the era of worker hating, when the top 1% made eleven times the gains of the bottom 99%. When the figures for 2007 are released, we can expect even greater gains for the greedy rich.

The data shows that the top 10% have done really well over the past few years, and government has done really well for them. The rest of us are going to suffer, but their wealth, however obtained, will protect them. Now we need money to pay for their bailouts, their Ponzi schemes and their wars. It’s time for them to pay for the benefits they took.

Obama must keep his promise in order to make sure that everyone contributes to the solution. There are millions of us who gave him money during the campaign. Many of us gave more that we really thought we could afford, and we did it in part so he wouldn’t be indebted to big money. We expect him to act like it. The Bush tax cuts for the rich must be terminated as the first order of business. We can raise rates later in the year.