The Great Evil

The tax bill before Congress pays short shrift to the middle class, hobbling the nation's ability to confront the real threat: a malevolent national debt spiraling out of control.

In 1745, James Bradshaw, an 18^th-century merchant, wrote a pamphlet advocating trade policies to protect the Irish and British wool industries from competition from the Spanish and French.

“Thirty years ago, they manufactured in Ireland large quantities of cloth of eight to nine shillings per yard,” Bradshaw wrote in his pamphlet headlined: “A Scheme to Prevent the Running of Irish Wools to France.

“The lower and middle class of their people appeared at that time well dressed in Ratteens and Frizes,” Bradshaw said of the coarse woolen coats of the era, “while the better or richer class wore clothes of ten shillings per yard and the nobility and gentry, the superfine clothes then made in England.”

Bradshaw lamented how the Irish wool farmers, suffering from an influx of cheaper wool from Spain, smuggled wool to France to compensate for their poor finances, a practice he called “the great Evil.” Unbeknownst to the unassuming advocate of British wool, he had also coined a phrase that would remain with the world’s lexicon far longer than his sturdy Ratteens and Frizes.

Bradshaw’s pamphlet is the first known use of the phrase “middle class,” but it wouldn’t be the last. Indeed, for the next two and a half centuries or more, the thriving middle class that Bradshaw championed would become a concept synonymous with peace, prosperity, and openness, not exactly what we have in our current politics.

“When your middle class is happy, your nation is happy,” Thomas P.M. Barnett wrote in his thoughtful and provocative book, “America’s New Map -- Restoring Our Global Leadership in an Era of Climate Change and Demographic Collapse.”

“Your people are more kind, less self-centered, more open to outsiders, and more generous with the less fortunate and the wider world,” said Barnett, who holds a political science from Harvard University and is a respected strategist for the government and private sector.

“Those are the profound moral consequences of economic growth, he continues, “ours is s better, truer, and higher-functioning democracy when we collectively focus on satisfying the needs and ambitions of our middle class.”

American history backs up Barnett’s thesis. From 1945 to 1973, the nation’s middle class experienced unprecedented prosperity and upward mobility. Income distribution became more egalitarian, with declines in the share of wealth held by the richest Americans. During the same period, Barnett says, economic expansion “triggered all manner of political ambition to fix our society, while actively defending the Free World.”

America then reversed itself and began two decades of political backlash between 1973 and 1993, when middle-class America suffered economic stagnation and rising inequality. The share of national income for the top one percent of taxpayers nearly doubled while the share going to the bottom ninety percent fell. Middle-class wages experienced the most significant stagnation in American history as Americans voted for smaller government, less regulation, and a stronger military.

The middle class thrived once again between 1993 and 2000, when middle-income families saw their net worth grow by more than 40 percent, and the nation ran four consecutive budget surpluses, allowing it to cut the national debt. President Bill Clinton managed to run surpluses by increasing a range of taxes that hit corporations and wealthier Americans. He enacted spending reductions, too, capitalizing on the “peace dividend” achieved with the end of the Cold War. He also cut non-defense discretionary spending.

The nation simultaneously reached out to the world, expanding immigration and overseas military activities that extended until 2008, Barnett says, when the Great Recession struck and “plunged America into its current bout of political polarization, anti-immigrant fervor, culture wars and profound rejection of overseas military burdens.”

“Today,” Barnett argues, “the dominant concern of America’s middle class is the nightmare of backward mobility, exemplified by negative net worth, or owing more than you own with little hope of paying off your debts. This fear is personified throughout the Millennial and Gen Z cohorts, who now struggle with the twin afflictions of student and consumer debt, and the gig economy that pays too little money and no benefits.

“As politically open-minded and culturally diverse as those generations are,” he says, “we cannot assume they will step up to sustained progressive leadership as long as America’s middle class is beset with all manner of fears for its future.”

Barnett’s assessment is part of his wider global perspective, spelling out how climate change and aging worldwide demographics could redefine America’s global alliances and pose new challenges and threats to its future.

However, his thesis also provides a valuable context for evaluating the merits of America’s current state of politics, particularly in light of President Trump’s “Big, Beautiful” tax bill, which has become a hot topic of conversation in recent news, although the book was published before the legislation gained its current prominence.

A broad range of non-partisan analysts, including the Congressional Budget Office, have assessed the legislation. Nearly all conclude that the bill’s benefits are heavily skewed to the nation’s wealthiest taxpayers, giving short shrift to the middle class, the engine of growth and prosperity that Barnett convincingly outlines in his book.

Passed recently by the House and now pending before the U.S. Senate, the legislation would give the nation’s wealthiest taxpayers, those earning more than $5 million a year, an average tax cut of $300,000. The top five percent of taxpayers (those earning more than $460,000) would get an average cut of $21,000.

In contrast, the middle twenty percent of taxpayers (those earning between $67,000 and $119,000 a year) would see an average tax reduction of $1,850. The lowest twenty percent (those who earn $35,000 a year or less) would get an average cut of $160, which is offset by benefit cuts. Indeed, the poor would see their taxes rise by about $40 because of the offsetting benefit cuts in the legislation.

Although the loudest and most outraged public debate over the bill centers on reports about billionaires such as Amazon’s Jeff Bezos paying little or no taxes, the reality is that America’s wealthiest citizens pick up most of the tax bill. Data from the IRS and the non-partisan Tax Foundation says that taxes paid by the top ten percent of taxpayers (those who earn $169,800 and more) cover around 76 percent of all federal income taxes paid.

The real issue facing America is how we compensate for the lost revenue America suffers if Congress continues and enhances the tax cuts passed during President Donald Trump’s first term. The answer: We borrow it, and we cut benefits that now flow to the poorest Americans.

If the Senate passes the House bill intact, we will also sharply increase the federal budget deficit and create a national debt level that America has seen only when it was involved in a world war.

What no one is talking about is why in the world should the nation do this.

America doesn’t have to. The financial and economic challenge the nation currently faces is not impossible. We know how to reduce debt. In the 1990s, when Bill Clinton was president, the nation ran four consecutive budget surpluses from 1998 to 2001 and lowered the national debt held by the public, which refers to money it borrows from investors.

A caveat: The government’s total debt didn’t fall during the period because total debt includes funds the government borrows from other federal programs with a surplus, such as Social Security. Nevertheless, under numerous assumptions, the prospect of a debt-free America loomed on the horizon.

Clinton achieved his budgetary feat because of a tax increase on the top five to ten percent of taxpayers and increased corporate taxes. He boosted taxes on the Social Security benefits of higher-income recipients, increased the gas tax, and implemented spending restraints.

What impact did these actions have on the economy? Growth in the GDP, the broadest measure of the economy, averaged about 4 percent during his two terms, about double the current rate. Middle-class income rose by about 14 percent.

The nation’s national debt now stands at $36.2 trillion, a “Great Evil” that makes Bradshaw’s dreaded wool scheme pale by comparison. If history is any guide, and it usually is, three factors must combine to lower America’s “Great Evil”: A strong economy, higher taxes, and lower spending.

In the current debate, Congress and President Trump don’t even consider allowing the tax cuts initiated in his first term to expire, which would increase federal revenues that could help reduce debt. The truth is we can’t afford a tax cut, and we must consider new taxes and spending cuts to start whittling away the national debt to meet the challenges that Barnett outlines in his perceptive book.

Barrett goes far beyond dealing with debt while drawing the shifting map that will reorient America’s future interests. But the nation can’t meet the real challenge he poses if it’s broke.

—James O’Shea

James O’Shea is a longtime Chicago author and journalist who now lives in North Carolina. He is the author of several books and is the former editor of the Los Angeles Times and managing editor of the Chicago Tribune. He is also the former chairman of the board of the Middle East Broadcasting Networks. Follow Jim’s Five W’s Substack here.

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