White House economist Austan Goolsbee says that the "people at the commanding heights of the economy," a.k.a, rich people, benefited inordinately from tax cuts during the Bush administration, thus creating an imbalance in the economic order which ultimately led to the current, global financial crisis.
Goolsbee, a former University of Chicago professor and now an economic adviser to President Obama's, told Fox News that during the Bush era people with incomes over $250,000 per year received "trillions of dollars of tax cuts, while the middle class was squeezed like never before."
Goolsbee now says that the U.S. economy needs to be realigned by Obama’s team.
"We need to go back to an issue of balance," Goolsbee told Fox.
"In the ’90s, we had a more balanced view. We've gotten out of balance. People at the commanding heights of the economy with incomes over $250,000 a year have been receiving trillions of dollars of tax cuts, while the middle class has been squeezed like never before. That squeeze on the middle class is what got us into this crisis."
Goolsbee said that the "recovery package" sponsored by the Obama administration and the new federal budget give a tax cut to more than 95 percent of “working people,” and that people who make more than $250,000 a year will go back to the rates as they were at the end of the 1990s.
“If they pay a bit more, that isn't going to bring the economy down. That style of thinking, that it's going to trickle down and we should just keep cutting taxes at the top, got us where we are today,” Goolsbee said. “It didn't solve the problem.”
In contrast, research by Americans for Tax Reform, a center-right think tank in Washington D.C., indicates that the new Obama budget actually contains $1 trillion in tax increases, making it the largest tax increase in global history, not a simple return to the tax levels of 10 years ago.
"Two dollars out of three in small business profit occurs in households making at least $200,000 per year — the same families that the Obama budget would raise taxes on," according to a briefing paper by Grover Norquist, president of Americans for Tax Reform.
According to the group, 20 million small businesses are sole proprietorships with no employees, meaning they are doctors or other professionals.
"By raising the top tax rates from 33.35 percent to 36 to 39.6 percent, the Obama budget raises the tax rate on $2 of every $3 in small-business profit," writes Norquist.
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