In last week’s column I noted how the tax increases on the 1% included in the “fiscal cliff” deal amounted to little more than the political equivalent of a love tap for the rich because upper income tax rates remain much closer to their historic lows than to their mid-twentieth century highs.  This is disheartening because, as the political narrative shifts toward some form of austerity in the name of deficit reduction, our country’s historically high level of economic inequality remains deeply entrenched and there simply will not be enough revenue to engage in a robust progressive program centered around “nation building at home” as President Obama likes to say.

In sum, the unemployment crisis and other key social and economic needs will take a back seat to deficit reduction and the battles will not be about whether an austerity agenda is the right course for America but rather what form of austerity program we should pursue.  While there is an impressive list of eloquent critics (from Paul Krugman and Robert Reich to Joseph Stiglitz and Bernie Sanders) bemoaning this wrong-headed approach, we seem destined to ignore them and head down a road that spares the comfortable while further burdening the afflicted.   In elite opinion circles, it’s a bipartisan consensus.   Sure the wing nuts on the right are crazy but the even the Democrats are largely wedded to the gospel of Simpson-Bowles.

But isn’t this bitter medicine that will make us all better in the long run?  No, it’s bad policy that amounts to a not too-thinly-veiled class war.    [Read more…]