Presidential budgets are aspirations. They're not real, in the sense that no one really has to adhere to them. Obama's budget now goes to Congress, where budget committees will draw up their own versions. Even these congressional budgets are mere guidelines for appropriations and tax-writing committees. Lobbyists will be swarming. So don't expect the final sausage to look exactly like the meat the President is putting into the grinder. On the other hand, the sausage is likely to bear more than a passing resemblance. Remember: This president's approval ratings are well over 60 percent -- substantially higher than Congress's overall approval rating, and far far higher than Republicans in Congress -- and the nation is still looking to Obama to lead the way out of our troubled times. And it's a Democratic congress, with a Democratic Senate that could be (if Franken is seated) one vote short of being able to cut off a filibuster.
It's about time a presidential budget uneqivocally redistributed income from the very rich to the middle class and poor. The incomes of the top 1 percent have soared for thirty years while median wages have slowed or declined in real terms. As economists Thomas Piketty and Emanuel Saez have shown, in the 1970s the top-earning 1 percent of Americans took home 8 percent of total income; as recently as 1980 they took home 9 percent. After that, total income became more and more concentrated at the top. By 2007, the top 1 percent took home over 22 percent. Meanwhile, even as their incomes dramatically increased, the total federal tax rates paid by the top 1 percent dropped. According to the Congressional Budget Office, the top 1 percent paid a total federal tax rate of 37 percent three decades ago; now it's paying 31 percent.
Fairness is at stake but so is the economy as a whole. This Mini Depression is partly the result of a widening gap between what Americans can afford to buy and what Americans when fully employed can produce. And that gap is in no small measure due to the widening gap in incomes, since the rich don't devote nearly as large a portion of their incomes to buying things than middle and lower-income people. The rich, after all, already have most of what they want.
By Susie Madrak — February 27, 2009