LEGISLATIVE UPDATE


TRUTH BE TOLD


Reagan-era tax cuts for the wealthy, anti-union animus set the stage for todays’ deficits


By MARTY O’CONNOR The governor’s Executive Budget for


2010-11 has been released. With the “leaks” that preceded the formal release there were no major surprises. This budget, like previous budgets, contends the fiscal problems New York state faces are caused by overspending, not declining revenues. This is the narrative of the wealthy, the


corporations and, increasingly, both major political parties. The roots of this argument can be traced back to 1981. That was the year everything changed. Ronald Reagan was sworn in as president and his “trickledown” economics and anti-union and anti-public sector policies took root. Two actions changed the


course of this country. First, he cut taxes on the wealthiest Americans. Second, he fired the striking air-traffic controllers and hired replacement workers (scabs) to do their jobs. When Ronald Reagan took office on


January 20, 1981, the highest wage earners’ tax rate was 70 percent. By the time he left office in 1989, the rate had dropped to 28 percent. Before the Professional Air Traffic


Controllers Organization (PATCO) strike, union density in the U.S. was 23.3 percent. By 2007, it was down to 12.4 percent. However, union density in the


private sector is considerably lower. By 2009, it was 7.2 percent. The combined effects of the tax cuts


for high earners and the firing and replacement of the PATCO strikers set in motion forces that have had a tremendous effect on the distribution of wealth in the U.S. In the period after World War II and until the election of Ronald Reagan, the share of total income going to the top 10 percent of wage earners hovered around 33 percent. Today, it is close to 50 percent. We can look at it from a different perspective. When income grows, who gains? According to the Economic Policy Institute, income in the U.S. grew from 1945 through 1980 by an average of $19,080. Of this growth, 65 percent went to the bottom 90 percent of wage earners. Now, let’s see what effect the Reagan


tax cuts had on the distribution of wealth. Looking at 1981 to 2008, incomes grew, on average, by $12,189. Of this, only 4 percent went to the bottom 90 percent of wage earners. The income tax cuts, particularly for


high-wage earners, have had a tremendous effect on government revenues as well. New York’s governors started cutting state taxes in the mid- 1990s. According to the Fiscal Policy Institute, if New York were at the early 1990s tax rates now the state would have


Not all state work force gains, losses tied to union concessions


By SHERRY HALBROOK Although the governor’s Executive


Budget proposal for 2011-12 would reduce state operations spending overall by approximately 10 percent, the likely effect on state employees varies by agency. The proposal would reduce the state


work force by a net of 11,423 full-time- equivalent (FTE) positions to 179,042 FTE positions. The governor has said 9,800 of these


reduced positions may be through layoffs, and most of the layoffs could be averted if the unions agree to $450


Page 8—The Communicator March 2011


million in concessions, such as pay cuts. Although the budget proposal is


generally vague about where layoffs would come, PEF has been able to glean insights into how members would be affected. Among the state agencies most


affected are: • The Department of Correctional


Services (DOCS) and the Division of Parole (DOP) would be merged into a new agency, the Department of Corrections and Community Supervision. The budget anticipates a


loss of 940 FTEs in staff, currently at DOCS, through attrition. Of those, 650 positions in inmate supervision would be eliminated. The other 290 vacancies would be backfilled and the budget would add 50 new positions in health services and five in support services. PEF estimates the governor’s prison


closure proposal would result in up to 1,150 layoffs of staff now at DOCS. PEF believes those layoffs are included in the Executive Budget’s total of 9,800


PEF Information Line: 1-800-553-2445


Striking ProfessionalAirTraffic Controllers Organization (PATCO) picket in 1981.


$13.5 billion more in revenues this fiscal year. That would go a long way toward resolving our current budget deficits. Not only are these revenues lost, but


the surcharge put in place on the wealthiest New Yorkers is scheduled to expire December 31 of this year, and Gov. Andrew Cuomo wants to let it expire and give the wealthy a tax cut. New York’s tax structure already favors


the wealthy. Right now, the wealthiest 1 percent of New Yorkers (who make more than $633,000 annually) pay 8.4 percent of their income in state income taxes and local property taxes. The governor wants to cut this to 7.2 percent. Meanwhile, all of us in the bottom 95


percent of taxpayers pay an average of 10.58 percent of our income. The only way to get back to the good


old days of the pre-Reagan years is to have a fair tax structure and a vibrant labor movement. Without change, we will continue to slip into some Dickensian nightmare. We will know in the next few months


whether New York will rebel against this obscene narrative and force the wealthy to pay their fair share, or the assault on the beleaguered middle class will continue.


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