In his speech in Raleigh, NC, Monday, Barack Obama outlines how he would make the U.S. more competitive in the global economy and help working-class families who often wind up being hurt when jobs migrate from industrial states like Ohio and Pennsylvania to China and other low-wage countries. Obama also skewers John McCain's economies policies, saying they'd add $5.7 trillion to the national debt, while his own are "pay-as-you-go."
Obama's proposed tax relief for working-class families -- $1,000 -- is something. But it doesn't deal with the equity issue nearly as boldly and structurally as Kenneth F. Scheve and Matthew J. Slaughter did in their "A New Deal for Globalization" article in Foreign Affairs last year. They called for elimination of the terribly regressive FICA payroll tax for the 67 million workers who earn less than the median income of $32,140. That would give back to those workers an average of about $3,800 that now gets lopped off the top of their wages annually. The $256 billion cost of the payback could be covered by raising the $94,200 cap on payroll taxes or the rate of those taxes, or a combination, Scheve and Slaughter say.
A radical, leftist idea? Well, remember that Slaughter served on President Bush's Council of Economic Advisers from 2005 to 2007.
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