Setting the stage

Just days after the congressional “supercommittee” tasked with reducing the federal deficit announced last week its inability to reach compromise, a new government report shed further light on the situation. As Floyd Norris, writing about the report in The New York Times, puts it, “For companies, these are boom times. For workers, the opposite is true.”

Never in the eight decades before the current recession, Norris writes, have corporate after-tax profits been higher than 9 percent of America’s gross domestic product. Now the figure is above 10 percent.

“During the same period,” Norris continues, “there never was a quarter when wage and salary income amounted to less than 45 percent of the economy. Now the figure is below 44 percent.”

And yet the six GOP members of the supercommittee absolutely refused to consider a balanced approach to reducing the deficit that would have included higher taxes on America’s wealthiest citizens. They insisted instead that the deficit be reduced entirely by cuts in domestic programs—that is, on the backs of the middle class.

Now they’re in a pickle, however. By failing to develop a deficit-reduction plan, the committee triggered $1.2 trillion in automatic cuts scheduled to begin in 2013. About $500 billion of that must come from military spending, a notion that curdles Republicans’ blood.

Already congressional Republicans are vowing to waylay those cuts. President Obama, meanwhile, has promised to veto any deficit-reduction plan that doesn’t include news sources of revenue.

This sets the stage for a vigorous debate in presidential-election year 2012. Polls show a large majority of Americans agree that the wealthy are not paying their fair share and support the president’s balanced approach to deficit reduction. It will be interesting to see how the debate plays out.