Of fear mongering and false narratives

The proverbial bovine fecal matter has been piling up recently. According to columnist Frank Watson, in his Sept. 26 piece, the minimum wage was never intended to be a living wage, but an income for “untested, unskilled labor.”

Meanwhile, Don Brunell complained in his Sept. 12 column about the skyrocketing national debt, blaming it on so-called entitlement programs and government overspending, noting “taxes must be affordable.”

Both perspectives are patently misguided, if not outright misleading and false.

First, some history: the minimum wage was first established by the Fair Labor Standards Act of 1938 with the intent, according to the Cornell School of Law, of protecting workers and helping to stabilize a broken, post-depression economy. The act was “designed to create a minimum standard of living to protect the health and well-being of employees.”

In the aftermath of the more recent Great Recession, the spending power of the then federal minimum wage of $6.55 per hour declined by 20 percent before Congress raised it in 2009 a whopping 70 cents — less than a single percentage point — to $7.25.

But that was 10 years ago. Inflation has increased nearly 20 percent since, effectively making the minimum wage worth about $5.80 today. Try living on that, even as free market housing costs are pushing families onto the streets, homeless.

Since 1979, the before-tax income of the top 1 percent of U.S. households has ballooned seven times faster than the bottom 20 percent, according to Inequality.org.

And while incomes for the richest 1 percent have recovered nicely since the 2008 financial crises, incomes are just now starting to catch up for the bottom 90 percent, whose wages increased only 22 percent between 1979 and 2017.

Meanwhile, as inflation rose 237 percent during that period, worker productivity increased 138 percent. That is, employees today are working harder and producing more than they did some 40 years ago, but not getting a slice of the profit-pie in the form of higher wages as a result of their increased productivity.

So, to disparage the minimum wage and its intent to create a decent standard of living while the rich keep getting richer lacks both a basis in historical fact and empirical reality. To suggest that the minimum wage is only for high school and college-aged kids is patently false and misleading.

Then, Mr. Brunell suggests the ballooning national debt we may be passing off to our offspring is an “injustice,” due in part to so-called entitlements such as Social Security and Medicare.

Wrong again. Yes, social security is a type of tax, but one that goes into a trust fund, not the general fund, and that eventually comes back to the taxpayer upon retirement.

The Social Security Trust fund currently holds something like $2.9 trillion in reserves, and earns approximately $80 billion in interest annually from the federal government, who borrows from it.

While it may be true that the projected payouts from the fund may burn through its reserves around 2034, there are plenty of fixes. According to a 2018 Motley Fool article, the Republican answer is to raise the retirement age — again — while Democrats would require the wealthy to pay more to balance the trust fund.

I agree with Brunell’s obvious assertion that “government revenues rise as employment grows.” But employment and wages are two different animals. Employment has been recovering of late — unemployment was at a record low of 3.7 percent in July. But wages remain essentially stagnant.

What Brunell fails to mention is that the federal deficit he is so altruistically concerned about recently shot up to historic levels after President Trump’s Tax Cuts and Jobs Act slashed taxes for the wealthy. The rise wasn’t due to entitlement programs. The federal deficit is now projected to rise as much as 25 percent by the end of this year alone, according to the non-partisan Congressional Budget Office.

The numbers cited by Brunell — that the national debt could rise to 175 percent of the gross domestic product by 2040, a 135 increase from historical averages — are being used only to incite fear and discontent in his readers. It’s a red herring; a false narrative.

The solution is simple: tax the wealthy, especially the ultra-wealthy.

Between the 1950s and 1970s, the tax bracket for the highest income earners was roughly 70 percent. Today it’s 37 percent.

Do the math. Amazon CEO Jeff Bezos earns in excess of $4.5 million per hour. Facebook CEO Mark Zuckerberg earns $1.7 million per hour, while Wal-Mart’s Alice Walton rakes in something like $1.3 million.

The solution to Brunell’s fear of a soaring deficit is simple and tied to Watson’s false understanding of the minimum wage.

American consumer spending accounts for about 68 percent of the nation’s gross domestic product, according to the Bureau of Economic Analysis.

The solution to the rising deficit is a win-win: increase the minimum wage to a real and true living wage and people will spend more even as their standard of living increases. That money will circulate within the economy and fill tax coffers.

Then tax the wealthy more — much more — to fix the budget deficit, Social Security and other social programs intended to help those unable to help themselves, repair the crumbling U.S. infrastructure and fix so many other ills facing our nation and the world.

It’s simple: tax the rich.

Lee Hughes can be reached at lee@cheneyfreepress.com.