Taxing surplus investment income helped make 20th century capitalism prosperous, but the very rich led a successful tax revolt. The very rich hated the 90% tax rates, even though it was money they never would have spent. They discovered that taxing surplus income is not necessary to make capitalism work, because government debt will do almost the same thing.
U.S. government debt roughly equals the taxes that investors no longer have to pay. Since so much borrowing by the U.S. government is from foreign governments, foreign investors, or hidden in tax sheltered investments, a return to taxing enough of the surplus investment income is no longer possible. Globalization and changes in tax policies have limited our ability to tax most surplus investor income.
The Failure of Stimulus.
Borrowing surplus income in order to get it back into circulation would be a functional solution to excessive investor income, but Obama's heavy reliance on a trickle-down stimulus will make his stimulus program ineffective.
Trickle down economics is another policy tailored to please the very rich. The trickle down ideal is that surplus investor income that the government borrowed should go right back to the rich, as if it wasn't surplus in their hands already.
Most economists support directing the borrowed surplus income to where it will be spent, thus getting it back into circulation. Still, we are immersed in propaganda from the very rich telling us that investors would invest more and create jobs if they got that surplus income back. We can't stimulate the economy by giving more money to people that already have too much. Investors at the top are the only group who are not going to spend additional income, that's why it had to be borrowed from them in the first place. It is still surplus income every time it goes around the borrow/trickle cycle.
Spending on infrastructure is not going to create enough work, and investors already have plenty of money looking for some place to go. An effective stimulus policy must break the taboo on direct stimulation of consumer income. Directing the surplus income of investors to consumers is the best way to stimulate the economy. Trickle down stimulus just goes into more speculation and more lending to the government rather than into the creation of jobs. The consumer demand that can create enough jobs to go around will require trickle up spending.
But, stimulation to make jobs is the wrong goal. We should only do the work we need to provide goods and services. It is no longer true that "the harvest is abundant and the laborers are few." (after 2000 years)
To read about how to provide abundant goods and services without squandering scarce natural resources see...
http://home.earthlink.net/~durable/
Barry Brooks