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Monday, Dec 3, 2012 7:21 PM UTC

Understanding the “fiscal cliff” in 150 seconds

Democrats, listen up: Follow these eight guiding principles, and you just might save the U.S. economy VIDEO

By , ROBERTREICH.org

Topics: Video, RobertReich.org, Fiscal cliff, Taxes, Wall Street, Business, ,

Understanding the (Credit: AP/Carolyn Kaster)
This originally appeared on Robert Reich's blog.

UNDERSTANDING THE FISCAL CLIFF (IN 2 MINUTES 30 SECONDS)

Democrats, here are eight principles to guide you in the coming showdown over the fiscal cliff:

ONE: HOLD YOUR GROUND. The wealthy have to pay their fair share of taxes. That’s what the election was all about, and we won. It’s only fair they pay more. They’re taking home record share of national income and wealth, and have lowest effective tax rate in living memory.

TWO: NO DEAL IS BETTER THAN A BAD DEAL. You’re in a strong bargaining position. If you do nothing, the Bush tax cuts automatically expire in January, and we go back to rates during the Clinton administration. Which isn’t such a bad thing. As I recall we had a pretty good economy during the Clinton years.

THREE: MAKE REPUBLICANS VOTE ON EXTENDING THE TAX CUTS JUST FOR THE MIDDLE CLASS. After all the Bush tax cuts expire, have Republicans vote on extending the Bush tax cut just for the middle class. If they refuse and try to hold those tax cuts hostage to tax cuts for the wealthy, it will show whose side they’re on. They’ll pay the price in 2014.

FOUR: DEMAND HIGHER TAX RATES ON WEALTHY, NOT JUST LIMITS ON DEDUCTIONS. Don’t fall for Republican offers to limit some tax deductions on the wealthy. Demand we go back to higher tax rates on the wealthy and eliminate their unfair tax loopholes, so they truly start paying their fair share.

FIVE: DON’T CUT SAFETY NETS. Don’t sacrifice Medicare or Social Security, or programs for the poor. Americans depend on these safety nets and can’t afford any benefit cuts.

SIX: DON’T CUT INVESTMENTS IN OUR FUTURE PRODUCTIVITY. Education, basic R&D, and infrastructure aren’t spending; they’re investments in our future prosperity. If the return on these investments is greater than the cost, they ought to be made, period.

SEVEN: CUT SPENDING ON MILITARY AND CORPORATE WELFARE. You want to cut, cut spending on the military — which now exceeds the military spending of the next 13 largest military spenders in the world combined. And cut corporate welfare — support to agribusiness, oil and gas, Big Pharma, big insurance and Wall Street.

EIGHT: PUT JOBS BEFORE DEFICIT REDUCTION. Finally, don’t cut the budget deficit as long as unemployment remains high. Otherwise you’ll cause the economy to contract, making the deficit even larger in proportion. That’s the austerity trap Europe has fallen into. We need to create American prosperity, not European austerity.

Remember: Jobs come first.

Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written 13 books, including his latest best-seller, “Aftershock: The Next Economy and America’s Future;” “The Work of Nations,” which has been translated into 22 languages; and his newest, an e-book, “Beyond Outrage.” His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org. More Robert Reich.

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