Warren Buffett said, "If this is class warfare, that's fine with me. My side is winning." Mr. Buffett was joking but he was right nonetheless. His side is winning.
The Republicans acting on behalf of the wealthy class have lowered taxes and removed government regulations to such an extent that the Clinton budget surplus has been turned into a monumental budget deficit and an unregulated financial industry nearly ruined the country.
Only hundreds of billions of dollars in the form of taxpayer bailouts saved the financial system from collapse, and the collapse of the financial system would have meant a second Great Depression.
Recall that Bush Republicans enacted major tax cuts in 2001 and 2003. The Congressional Budget Office subsequently reported that in 2004 after-tax income of the richest one percent of households rose by 20 percent to $868,000. That was the largest increase in 15 years.
In contrast, the income of the middle fifth of the population rose only 3.6 percent and the income of the bottom fifth rose 1.4 percent. (thhp://www.cbpp.org/cms/?fa=view&id=957) The Republicans have sold many middle class voters on the idea of tax cuts without telling them that the cuts benefit mainly the rich.
The sad thing is that these tax cuts were set to expire this year but last December they were extended for two more years with almost all Republicans and many Democrats voting in favor of the extension. President Obama supported the extension.
One must fault the Democrats for not having the backbone to stand up to the Republicans on this issue. The reason for this lack of backbone was fear. The Democrats feared with good reason that the Republicans would allow no other form of fiscal stimulus. It was the tax cut extension or nothing. And with unemployment still running high, the economy sluggish and millions of homes facing foreclosure the need for some government stimulus was powerful.
The Democrats yielded to the Republicans' threat. It might have been better to call them on it and let the Republicans take the heat for further trashing the economy when they failed to allow any other form of stimulus.