Dr. Carl Luna gave a fast paced, detail rich talk at the May club meeting. He opened by proclaiming, “Funny thing about Trump, he does what he says he’s going to do, unlike most!” To make his point, Luna referenced the move of the Israeli Embassy, withdrawing from the Iran deal, and the tax cuts.
According to Luna, the “tax plan will have the expected impact, the 1% gets it all!” It has helped Republicans move the ball closer to their ultimate goal ever since Reagan, a flat tax.
But Luna, while giving detailed history of our tax structure over the last century and a half, focused even more on the intersection of taxes, economic equality and what he feels is a real threat to our Democracy. According to Luna, “The last time our Democracy was in this much trouble was in the 1930’s.”
Luna reviewed three key economic periods in our history. The first was the “laissez-faire” supply side economy (translation: just leave things alone) of the early 20th century that favored business. This period was characterized by fast industrialization through capitalism after the Civil War, along with an influx of immigrants. Around 1932, “Demand Side” Keynesian economics (1932-1980) took over with the idea that government steps in and creates demand through how it taxes. The goal was to prevent the rich from hiding their money by incentivizing them to invest it instead. World War II ended the depression, and everybody was employed.
However, “stagflation” hit in the 1970’s characterized by a stagnant economy with rising inflation and high interest rates. People got back to work but wages didn’t keep pace. Then came Reagan’s “Supply Side II” where the “rich figure out how to NOT pay taxes.” During the 1980’s big tax cuts were implemented, top rates were cut but were accompanied by massive spending. “Trickle Down Economics” was born and the result was that while the rich got their cuts, everyone else got poorer.
“Since Reagan,” Luna explained, “we continue to borrow money to give the rich tax cuts while wealthy people leverage government debt.” Obama and the 2008 recession made things more difficult. Wall St. became huge and was the single largest donor population. When the housing market failed and things started to spiral out of control, Wall St. got a $600 trillion bailout and no one went to jail. More money was pumped into the top while people just kept losing their homes. Now we have a real revenue problem.
“Thinking that the election will stop what’s going on now is magical thinking” according to Luna. “Simply trying to tweak a process that isn’t working is also magical thinking” Luna said. Supply side doesn’t work as well today due to globalization and the global exchange of money. Trump pulling the U.S. out of the global economy will devastate us. “Globalization is the world today,” Luna explained. Wealth concentration is a global phenomenon and the rich are getting richer faster.
So what are some solutions? One thing happening behind the scenes is George Soros, Democratic donor, is funding District Attorney races around the country to try and right issues of social justice. Luna also said “we need a sustained dialogue on Constitution 2.0.” Getting money out of politics will help some, but “it’s like chicken soup – there are lots of ingredients.”
And finally, “People movements are an important first step, along with voting for someone who will change the system. Winning is defined by sustained change.”