Occupy vs. Tea Party: Which Will Win?

Gary North

June 19, 2012

The Occupy Movement is negative. It has carefully refused to say what it is for.

It will lose. Why? Because you can't beat something with nothing.

The Occupy Movement opposes globalism. But which form? NAFTA/WTO globalism? United Nations globalism? Zero-tariff free trade globalism? International gold coin standard globalism? It refuses to say.

The Occupy Movement opposes corporate wealth, which it says is unequal. Does it oppose all inequality? Is it socialistic? Is it syndicalist? Is it distributivist? It refuses to say.

Recently, Kevin Zeese, one of the founders, was interviewed by Chris Hedges. He became very specific as to what he wants. He wants extremely high tax rates on the rich. He wants to roll back the Kennedy/Reagan tax cuts. He is a member of the Green Party. He spelled out his view.

Elections are something that Occupy needs to continue to avoid. The Obama-Romney debate is not a discussion of the concerns of the American people. Obama sometimes uses Occupy language, but he puts forth virtually no job creation, nothing to end the wealth divide and no real tax reform. On tax reform, the Buffett rule--that the secretary should pay the same tax rate as the boss--is totally insufficient. We should be debating whether to go back to the Eisenhower tax rates of 91 percent, the Nixon tax rate of 70 percent or the Reagan tax rate of 50 percent for the top income earners--not whether secretaries and CEOs should be taxed at the same rate!

Notice that he refers to the "Nixon tax rate of 70 percent." He seems blissfully unaware that this was President Kennedy's innovation. Like most of the Left, he has selective Alzheimer's.

Here is summary of the three great tax cuts in twentieth-century America.

The Harding-Coolidge tax rate reductions brought the top income tax rate down in stages from the wartime high of 73 percent in 1921 to 25 percent in 1925. This was a very large and unprecedented reduction in rates on the wealthy. Coolidge confidently predicted that his plan "would actually yield more revenues to the government if the basis of taxation were revised downward."

He was right. Between 1923 and 1928 real tax collections nearly doubled as the economy surged. The rest of the world languished as most other nations kept their World War I tax regime in place. As America's tax rates were chopped by almost two-thirds, the share of taxes paid by those earning over $50,000 (the rich back then), rose from 44 percent in 1921 when the rate was 73 percent to 78 percent in 1925 when their rate was 25 percent. No tax increase in world history ever pried that much tax out of the wealthy.

John F. Kennedy's tax cuts had the same salutary effects. "It is a paradoxical truth," Kennedy proclaimed in the 1962 commencement address at Yale to try to sell his tax cut program, "that tax rates are too high today, and tax revenues are too low, and the soundest way to raise the revenues in the long run is to cut the tax rates." JFK's tax plan cut the top tax rate from 91 to 70 percent.

Here's what happened, as described in a 1966 article in the US News and World Report. "Tax collections are beginning to astonish even those who pushed hardest for tax cuts in the first place." Indeed, after the tax cuts took effect, income tax collections rose by more than 50 percent from 1963 to 1968. Even more shocking was the impact on the distribution of taxes paid. Americans earning over $50,000 per year (the equivalent of almost $200,000 today) increased their share of taxes paid from 12 percent of the total in 1963 to almost 15 percent in 1966.

In 1981 Ronald Reagan proposed and signed into law a 30 percent across-the-board tax-rate reduction plan that was modelled after JFK's successful tax cut 20 years earlier. It produced the very same positive results. Tax revenues grew by $52 billion per year in the 1980s with tax cuts, versus just $35 billion per year after tax increases in the 1970s.

And once again, despite lower tax rates, the rich paid a larger share of the total. In fact, the top 1 percent paid 17.6 percent of all taxes when the top rate was 70 percent in 1981, but 27.5 percent in 1988 when the rate hit its low of 28 percent. The super-rich, the top 0.1 percent of income earners saw their share of income taxes paid double from 7 percent to 14 percent.

Zeese made it clear that the movement he founded has an agenda: a confiscatory system of graduated taxation. It is the same envy-driven call to ballot-box theft that the Left has long promoted, going back to Karl Marx in the Communist Manifesto (1848). Here is point two in his 10-point program for a successful revolution to turn bourgeois society into a communist society: "A heavy progressive or graduated income tax."

Meanwhile, Sweden is going in the opposite direction in taxing people, and the economy is booming.

The Tea Party comes with a radically different agenda: an agenda of tax cutting and budget-balancing. It wants to shrink the state. It appeals to Americans who want to reduce the power of the state in their lives.

The Occupy Movement's protesters do not know what the leaders quietly are planning. They chant, zombie-like, in response to the bullhorns of their leaders.

The Tea Party people had a candidate: Ron Paul. They are learning the basics of precinct organization.

In contrast are the Occupy people. Zeese said:

Our job is to build pockets of resistance so that when the flash point arrives, people will have a place to go. Our job is to stand for transformation, shifting power from concentrated wealth to the people. As long as we keep annunciating and fighting for this, whether we are talking about health care, finance, empire, housing, we will succeed.

"We will only accomplish this by becoming a mass movement. It will not work if we become a fringe movement. Mass movements have to be diverse. If you build a movement around one ethnic group, or one class group, it is easier for the power structure and the police to figure out what we will do next. With diversity you get creativity of tactics. And creativity of tactics is critical to our success. With diversity you bring to the movement different histories, different ideas, different identities, different experiences and different forms of nonviolent tactics.

In short, they have no plan, no tactics, no program of political action, no training, and no vocal representative. They have only slogans and chanting.

The Tea Party will win this thing when the economic crisis hits. The Occupy Movement will not.