Why Bill O'Reilly Shouldn't Report On The EconomySeptember 26, 2013 12:22 AM EDT ››› EMILY ARROWOOD
Fox News' Bill O'Reilly unleashed a slew of deceptive and historically inaccurate economic arguments to prop up the narrative that "taxes in America have reached critical mass" under President Obama, whom O'Reilly claimed has redistributed the nation's wealth.
On the September 25 edition of The O'Reilly Factor, O'Reilly ranted about the United State's current tax rates, complaining, "The federal government is getting more tax revenue than ever before and state and local taxes are at the highest level in the history of this country." O'Reilly argued that working Americans are being "punished" by today's tax rates that have "have reached critical mass," adding that President Obama has succeeded in redistributing the nation's wealth from the top to the bottom:
O'REILLY: President Obama and his acolytes do not want Americans to accumulate wealth. They want to take private wealth away from those who have it and give it to those who don't have it. And they have succeeded in doing that with an assist from the Bush administration, which ran up colossal debt after 9/11. Taxes in America have reached critical mass.
Later, when O'Reilly's guest Dr. Jeanne Zaino, a political science professor at Iona College, highlighted historic levels of income inequality and government efforts to mitigate the problem, O'Reilly yelled over her: "Your basic thesis of income inequality is socialism. Don't you get that? The government cannot impose income equality on a private marketplace. It can't."
O'Reilly misfired on several of his arguments. For starters, his focus on total raw tax revenue is deceptive. Total tax revenue rises as the size of the economy and the working population grows -- revenues are comparable only as they relate to the size of the economy, which corrects for this growth.
Under Obama, tax revenues as a share of the economy are historically low. During Obama's first term, the ratio of revenue to GDP averaged 15.4 percent, the lowest levels since 1950, according to data from the Tax Policy Center. For context, since 1950, federal revenue has averaged approximately 18 percent of GDP.
These numbers are unsurprising because federal tax rates have declined to "near historic lows" for middle-income Americans, the Center for Budget and Policy Priorities determined:
O'Reilly's claim that Obama has "succeeded" in redistributing wealth is laughable given the recent economic milestone the U.S. reached -- in 2012, the nation's income inequality gap reached its greatest extent since before the Great Depression. According to the Associated Press, America's richest one percent saw their incomes rise by 20 percent last year, while the other 99 percent of the country saw their incomes rise only one percent.
University of California, Berkeley economist Emmanuel Saez recently released research showing that the top one percent has captured 95 percent of the income gains made during the first three years of economic recovery following the recession.
Economist and former Labor Secretary Robert Reich addressed a similar argument to O'Reilly's for cutting taxes and found it lacking, debunking his cries of "socialism" in the process. As Reich explained, America's historic income inequality is hurting our economy, and tax cuts are not the solution:
[It's] a problem for the overall economy. It means that a growing portion of the population lacks the purchasing power to keep the economy going. In the United States, consumers account for 70 percent of economic activity. If they as a whole cannot afford to buy all the goods and services the productivity revolution is generating, the economy becomes stymied. Growth is anemic; unemployment remains high.
It's not coincidental that 1928 and 2007 mark the two peaks of income concentration in America over the last hundred years, in which the top 1 percent raked in over 23 percent of total income.
A resurgent right insists on even more tax breaks for corporations and the rich, massive cuts in public spending that will destroy what's left of our safety nets, including Social Security and Medicare and Medicaid, fewer rights for organized labor, more deregulation of labor markets, and a lower (or no) minimum wage.
This is, quite simply, nuts.
And this is why a second Obama administration, should there be one, must focus its attention on more broadly distributing the gains from growth. This doesn't mean "redistributing" from rich to poor, as in a zero-sum game. It doesn't mean socialism. The rich will do far better with a smaller share of a robust, growing economy than they're doing with a large share of an economy that's barely moving forward.