For Source of Debt Crisis, Look to the Tithes
These are mournful days. It’s the month of Tammuz, when the ancient walls of Jerusalem were first breached and the commonwealth began to crumble.
Or, to phrase it slightly differently: July, when the credit of the republic began to run out.
The sages of the Talmud teach us that Jerusalem and its temple fell because of “baseless hatred,” which was their polite term for the uncompromising fanaticism of the Zealots. I don’t think we need to translate that one.
It’s often the case that the weekly Torah readings carry an eerie echo of the daily headlines, and vice versa. Rarely, though, are the echoes quite this deafening.
Just a few days ago, for example, on the last Saturday in June — the final Shabbat of Sivan for you traditionalists — the Torah reading was the story of Korah. He was a prince of the tribe of Levi who challenged Moses’ leadership and got swallowed up by the earth.
The reading went on to suggest that Korah’s challenge was about more than just rank. The Levite tribe, you see, didn’t get a share of the promised land to farm, like all the other tribes. Their job was to manage the sanctuary and the meeting tent, and their pay consisted of the tithe brought to Jerusalem by all the other tribes. The best part of the tithe went to Moses’ brother Aaron and his sons, the priests. Korah evidently wanted a better cut. He shouldn’t have asked. The allocation of the tithes, the scripture warns, is “a statute forever throughout your generations.” A contract is a contract.
And wouldn’t you know it? Before the next week was up, we learned about judges in two states who ruled that a contract is, in fact, not a contract. It seems the good people of Colorado and Minnesota discovered their tithes no longer cover the costs of running the meeting tent and the other business of the tribe, so they decided to trim the amount they contribute to the Levites. The Levites went to court, insisting that they had a contract. The judges laughed in their faces.
Welcome to Tammuz.
Our modern-day Levites — the schoolteachers, garbage collectors, park rangers and other servants who do the public’s work — are getting quite a public hazing these days. Day after day, politicians and pundits stare out of our television screens and grouse about the fancy deals these slackers get at public expense. Why do we coddle them? Why should taxpayers’ hard-earned dollars go to the fancy salaries and gold-plated retirement packages their unions extort from the treasury?
The answer is embarrassingly simple. The public has to pay these bills because, besides being taxpayers, we are employers. Public employees work for us. They have contracts. What’s surprising is that the earth didn’t swallow up those legislators who voted to break the contracts, along with the judges who upheld them.
The big difference between public and private sector employees is that the public sector employees have a boss who is under public scrutiny and is expected to observe some standards of decency, while private sector employees mostly don’t. The question isn’t why public employees have good retirement benefits, but why private sector employees don’t.
We all know retirement is a looming crisis. We’re told it’s complicated and inevitable. It’s neither. Most workers don’t have pensions because most businesses did away with them. Why support a bunch of geezers when you can keep the cash for the managers and shareholders?
Nearly 80 million baby boomers are approaching retirement. The vast majority of them won’t have enough to live on. One-fourth of them have no retirement plan at all. Of those who have anything, most have a 401(k), where you get to save your own money. In effect, you get to dig into your pocket to make up for your old pension, which now goes to the shareholders.
The experts, of course, will tell you that we have too many old people and too few workers supporting them. There’s something to that. What they’re not saying is, first, that productivity per worker has soared along with the senior population, and second, that all the extra income isn’t available to support the old because it’s ended up in the pockets of a fortunate few.
Put bluntly, America has spent the last 30 years lowering taxes on the wealthy instead of saving for everyone else’s retirement. Deliberately, cold-bloodedly, eyes wide open. We declared class warfare on ourselves.
We’ve looked at these numbers before, but it’s worth reviewing them. They’re really not very complicated. In January 1981, when Ronald Reagan entered the White House, the top tax rate on the highest portions of wealthy persons’ incomes, was 70%. That was roughly the same rate it had been since the 1960s, when Lyndon Johnson lowered it from the 91% rate under Republican president Dwight Eisenhower. The national debt in 1981 totaled $900 billion. In other words, the amount the government collected in 1981 was roughly enough to pay for what it spent. The economy was booming, by the way. From 1945 through 1975, when the oil crisis hit, growth was around 4% per year.
Then the class war began. By 1989, when Reagan left office, the top tax rate had been sliced to 28%, and the national debt had tripled to $2.6 trillion. Reagan’s heirs continued his work: In 2007, just before the economy crashed during the second Bush administration, the top rate had inched back up to 35%. But the debt was now $9 trillion. Now we can’t afford to pay our bills. Surprise.
People will tell you these things are complicated, but they’re not. If you put fewer coins in your bucket, your bucket will be emptier because there will be fewer coins in it.
Now, you might suppose that with fewer coins being collected in taxes, the public would have more coins in its pockets, right? Guess again. Nearly all of it has gone to the wealthiest 10% of the population. The other 90% has been treading water or losing ground. In 1980 the richest 1% of the population made about half as much as the bottom 50%. Today, the richest 0.1%, just 300,000 individuals, make as much in total per year as the bottom 150 million. It’s been a lovely war, for some of us.
America’s fiscal crisis is currently scheduled to come to a head on August 2, when the federal government runs out of money to spend unless the debt limit is raised. That’s the second of Av, a week shy of the 1,941st anniversary of the destruction of the temple. Time enough to end the baseless hatred and start collecting those tithes again.
For sourcing of the statistics cited here, plus additional information, see the Forward Thinking blog at www.forward.com. Contact J.J. Goldberg at [email protected]