“Larger Deficits, More Inequality”: The House Republicans’ Head Scratching Economics
Whether you worry about the sluggish recovery, budget deficits, or widening inequality, you should be scratching your head at what the House of Representatives is up to this week.
On the one hand, the House will likely pass the small business tax cut sponsored by House Majority Leader Eric Cantor, which adds $46 billion to the deficit, largely benefits very high-income taxpayers, and has little potential for creating jobs. On the other hand, the House Agriculture Committee has approved a proposal, as part of its deficit reduction mandate, to cut $36 billion from the Supplemental Nutrition Assistance Program—formerly food stamps—a program that goes mainly to low-income households and is one of the best policies we have for creating jobs in a weak economy.
In Tuesday’s post on the New York Times Economix blog, Bruce Bartlett, who held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Reps. Jack Kemp and Ron Paul, asks the question, “Do small businesses create jobs?” He appropriately cites the research showing that politicians’ worship of small businesses as jobs creators is misguided, and that it is start-up firms, not small firms per se, that are the job creators. Moreover, many of those who would benefit from the tax cut are affluent doctors, lawyers, and stockbrokers—hardly the local mom and pop store that most people imagine when they hear the phrase “small business.”
Bartlett is scathing on the Cantor bill:
There may be policies that would increase the number of business start-ups and aid employment this way. But an across-the-board tax cut for every small business, defined only in terms of employment, is nothing but …[a] giveaway unlikely to create any jobs whatsoever.
Bartlett’s indictment is backed up by standard “multiplier” or “bang-for-the-buck” analyses from the Congressional Budget Office and private analysts like Mark Zandi, chief economist of Moody’s Analytics. In contrast to an increase in SNAP benefits, which they find to be among the most cost-effective measures for stimulating economic growth and job creation in a weak economy, both the Congressional Budget Office and Zandi find business tax cuts similar to the Cantor bill to be among the least effective. The economic growth and job creation impact per dollar of nutritional assistance spending is six to eight times larger than that of an across-the-board tax cut.
Here is what the House is doing with these two measures: It is adding $46 billion of tax cuts, nearly half of which will go to those making more than $1 million, to the budget deficit. According to the official Joint Committee on Taxation estimate, about $45 billion of it will be received in 2012-13, when the economy could in fact use a boost to jobs. At the same time, any stimulus from the tax cut will be wiped out by the $8 billion of the $36 billion SNAP cut that also would occur in 2012-13.
The bottom line on these actions is that they produce larger budget deficits, more inequality, and no net new jobs. So when I see the House moving in exactly the opposite direction of what is fair and makes economic sense, I’m inclined to ask: “Is it really more politically appealing to cut taxes for millionaires and increase the budget deficit than to maintain food benefits for the poor that also give an extra boost to the economic recovery?”
By: Chad Stone, Chief Economist at the Center on Budget and Policy Priorities, Washington Whispers, U. S. News and World Report, April 19, 2012
“Compassionate Conserative”: Gov. Sam Brownback’s Anti-Poor Agenda
The Kansas governor appears to be waging war against low-income families in his state.
The GOP presidential primary has offered some odd debates on who cares about the “very poor” and whether there should be a “safety net” or a “trampoline” to help people get out of poverty. Meanwhile, in Kansas, it seems Governor Sam Brownback is hoping to dig a bigger hole for the poor fall into. Between his tax plans and his approaches to school funding, Brownback’s agenda overtly boosts the wealthy and makes things harder for the poor. While many liberals speculate this to be a secret goal, Brownback is hardly making a secret of his agenda.
Currently, the Kansas Legislature is examining Brownback’s plan to redesign education funding. The plan removes extra dollars for students who are more expensive to educate—those who must learn English or come from challenging backgrounds. Instead of providing funding based on the actual costs of education, Kansas would allow counties to raise property taxes and keep the revenue. That’s great for wealthy districts with high property values and seriously damaging for poor districts where the tax base is relatively small. The plan would likely create enormous disparities between school districts, leaving students in poor communities with few good options among traditional schools. Meanwhile, wealthy school districts can likely spend more and more to make their schools top-notch.
While low-income kids would attend schools getting outpaced by wealthy counterparts, their parents would get to pay more in taxes. That’s because the governor is also pushing a tax plan, approved by Reaganite Arthur Laffer, that would actually raise the total tax burden on those who make less than $25,000 a year. For the record, that’s more than 40 percent of filers in the state. As I wrote last week, the plan not only raises taxes on the poor but also cuts government programs that target low-income Kansans, compounding the hit. Meanwhile, the biggest tax cut in the plan would go to the wealthiest residents, those making more than $250,000.
But perhaps most galling is that Brownback will not object to a new decision by the state’s welfare officials that cuts off food-stamp benefits for U.S.-born children of undocumented workers. The decision leaves hundreds of American children without access to the program.
I should also mention that Brownback has long considered himself a “compassionate conservative.” With his level of compassion, who needs safety nets, or as Newt Gingrich would say, “trampolines”?
By: Abby Rapoport, The American Prospect, February 8, 2012
“Food Stamps” Bigotry Feeds GOP Anti-Government Agenda
Newt Gingrich has rightly earned the derision he’s been getting for his performance last Monday night when he threw red meat wrapped in black skin to South Carolina Republicans who gave Gingrich a standing ovation for calling Barack Obama “the greatest food-stamp president in American history.”
When the master propagandist said President Obama “put” more people on food stamps than any president in American history he was deliberately confusing cause with effect.
Obama “put” no one on food stamps, as the New York Times rightly notes. People did that to themselves when they signed up for food assistance because they were poor, jobless or hungry. And the reason they were hungry was because America is suffering the worst recession since the Great Depression.
Indeed, as former George W. Bush speechwriter David Frum helpfully reminds us, in South Carolina where Newt Gingrich is now slyly insinuating his poison, residents may be hungrier than most since portions of the state suffer the highest poverty and unemployment rates in the nation and where 100,000 households now depend on food stamps for their daily diet.
By waving foods stamps around like the Confederate Battle Flag which flies aloft the South Carolina statehouse, Gingrich is clearly trying to “feed the prejudice of people who already believe that blacks and other poor people don’t really like to work,” argues the Times.
But the facts belie the bigotry since whites far outnumber blacks who receive foods stamps, notes the Times, and where 30% of those depend on food stamps to supplement the income they earn from working.
So, if you’re looking for the logic behind Gingrich’s raising of the food stamp non-issue forget about it, says the Times, because it just isn’t there.
Gingrich’s comments have been singled out for the scurrilous dog-whistle politics they are, and rightly so. But more important than the racially-charged implications of his coded messaging against minorities is the fact that Gingrich’s impugning of food stamps as a collective response to collective suffering is another manifestation of the larger Republican strategy to blame the current crisis entirely on government itself.
Newt Gingrich’ argument that the President of the United States would deliberately “put” millions of Americans on food stamps, like some drug pusher trying to get the public hooked on government the same way addicts get hooked on crack cocaine, is not all that different in its underlying assumptions and premises from the charges global warming deniers level against climatologists who deniers say exploit fears of the earth’s impending doom to grab power for themselves – or to make life miserable for oil magnets Charles and David Koch, whichever comes first.
It turns out the big banks weren’t the only ones whose failures the government bailed out in 2006 and 2008. Conservatives and Republicans, too, discovered that government can be a life-saver.
For, just as banks dubbed “Too Big To Fail” were able to press the government to cover their losing bets with taxpayer money, so too were true-believing conservatives able to target the government as a ready-made scapegoat for their own grievous blunders and so keep intact their blind faith in economic orthodoxies thought to be Too Veritable to Fail.
Be that as it may, never before had a worldview been more thoroughly repudiated than was the infallibility of unregulated markets by the economic calamity of 2008.
That left Republicans with an important choice to make. They could either man up and defend their record and supply-side principles against mounting evidence they had failed. Or, they could oppose everything the in-coming president did or stood for, and thereby take the emergency steps Barack Obama was forced to make to rescue the country from the disasters bequeathed to him by his retreating Republican predecessors and recast them as steps down some nightmarish path as America’s ancient liberties succumbed to a hostile government takeover.
The GOP left no doubt about which fork in the road it intended to take when right out of the gates House Republicans on a unanimous party line vote rejected Obama’s first $780 million stimulus bill at the height of the economic crisis in early 2009. This set the tone for all that has transpired in the preceding three years as Republicans execute their strategy of “blame the government first.”
While Republicans in Congress dig in with their rear-guard action to prevent President Obama from governing except on Republican terms, conservatives outside government are engaged in the task of feverishly rewriting history.
It’s what author Thomas Frank in his new book, Pity the Billionaire, calls “the classic switcheroo.” Republicans have been successful, says Frank, because they’ve been able to lay down a “thick smokescreen of deliberate bewilderment” that replaces real economic fears among middle class families facing job loss and foreclosure with false ones about the impending government takeover of society. It’s a bait and switch tactic being used so that a new villain (the government) can be pushed on stage as target for all those rotten eggs and tomatoes meant for the real villain (Wall Street).
A falsity this vast requires an all-consuming effort to round up and smash any incriminating evidence that might expose the nonsense behind the resurgent Right’s fairy tale for what it is, much like a criminal syndicate does when it ties up loose ends.
And so, says Frank, when the Right refused to accept that the infallibility of “free markets” was a myth, the only other road available to it in 2008 and 2009 was to “declare their true faith in the myth” and then to preserve the delusion by casting out as heretics all those unwelcome reminders conservatism and capitalism had failed — which meant in real life purging from Republican ranks most of the previous generation of people who also called themselves “conservative.”
That is why George W. Bush is a forgotten man and likely to remain a silent one all throughout the 2012 campaign. It is also why so many veteran Republican incumbents were consumed in the purifying fires of the Tea Party or beaten by Tea Party challengers whose single claim on political virtue was that they had virtually no political experience at all.
“Many Americans who had never been politically active, never walked a precinct, never interrupted their golf games, family gatherings or vacations to discuss politics, government or the Constitution were suddenly gripped with the sense that their government, nation and way of life were being stolen from them.”
Listening to that you might think the source of the writer’s worries was the growing concentration of wealth at the top, the theft of our government by Wall Street, the attacks on unions and the right to vote or a Supreme Court that had unleashed an unchecked flood of corporate cash with which to swallow our democracy.
But you’d be wrong. The words above are by right wing Red State blogger Erick Erickson, who gives voice to Tea Party paranoia that providing a lifeline to states to keep teachers in the classroom or cops on the beat or to extend unemployment insurance another few weeks to those who have lost jobs in the worst economic downturn in a century, wasn’t part of the rescue mission we’d expect from any decent government in a crisis like this but was instead a milestone that marked the way as President Obama and lead us down the perilous road to “European-style socialism.”
When Roger Ailes hired Glenn Beck shortly after conservatives were booted from all three branches of government in 2008, he told his new host: “I see this as the Alamo. If I just had somebody who was willing to sit on the other side of the camera until the last shot is fired, we’d be fine.”
Beck’s assignment was to take Barack Obama’s recovery challenge — that by logical implication exposed the Republican Party’s manifest failures with every problem President Obama managed to solve — and to turn that rescue effort into some vast left wing conspiracy to usher in a new “era of socialism.”
We were soon to learn what that assignment meant. Typical was a show aired in March 2010 when Beck said: “Most people will dread economic recessions and depressions. But some people don’t dread them. Some people are a little more opportunistic. They view this as their big chance, a window of opportunity to seize power to fundamentally transform things. They don’t see this as, ‘Oh my gosh, we’re struggling.’ They see this is as, ‘Now is our time.’”
You’ve got to hand it to Republicans. After their worldview collapsed in a pile of rubble around them they did not retreat or take time to rethink the fundamentals of their major premises. Instead, they responded like French Marshal Ferdinand Foch at the First Battle of the Marne when he declared: “Hard pressed on my right. My center is yielding. Impossible to maneuver. Situation excellent. I attack.”
Watching the way the Republican Party pursues power, I’m reminded of another quote, this one from the character Matt Hooper in the Spielberg classic, Jaws, when the marine biologist calls the Great White Shark a “machine” – a machine that does nothing all day but swim and eat and make little sharks. And that’s all.
Republicans today are just that single-minded — and also that ruthless and unsentimental — just like those Manifest Destiny expansionists that historian Robert W. Merry describes as rallying behind President James K. Polk and his war of conquest against Mexico to divest that often tragic country of its American possessions.
Unlike those Northern Whigs like Abraham Lincoln who opposed the Mexican war on moral grounds, or Southern Democrats like John C. Calhoun who opposed it for disturbing the delicate balance of power between slave state and free, Polk’s land-grabbing supporters understood that ethical considerations miss the fundamental truth about history, which Merry says is this: History does not turn on “normal suasion or concepts of political virtue” but instead moves forward “with a crushing force,” based on “differentials of power, will, organization and population.”
And so from the point of view of history, says Merry, the dismemberment of a “weak and dysfunctional” country like Mexico by a “vibrant, expanding and exuberant” democracy like America was not so much justified as inevitable.
These are the narratives and propensities that Newt Gingrich embodies with a vengeance with his dog-whistle references to food stamps that feed not only racist appetites but also the right wing/Fox News survival-of-the-fittest storyline that doing anything to repair the damage Republicans and free market capitalism have wrought — short of applying an even purer and more robust version of unregulated, untaxed capitalism – is nothing more than socialism and so contrary to the American Way of Life.
By: Ted Frier, Salon, Open Salon Blog, January 20, 2012
Why Do Republicans Hate Poor, Hungry People?
It’s almost as if Republicans are actively striving to get a reputation for being mean to poor, hungry people. On Tuesday, the Philadelphia Inquirer reported that the administration of Gov. Tom Corbett plans to start restricting eligibility to the Supplemental Nutrition Assistance Program (formerly known as the food stamp program). Specifically, the state is imposing an “asset test” — anyone under 60 years old with savings of more than $2,000 is no longer eligible for assistance.
The news isn’t quite as bad as some outlets are spinning it. Pennsylvania’s proposed asset test conforms to federal guidelines for SNAP and doesn’t include the value of a recipient’s home, retirement savings or car. But what’s troubling is that the nationwide trend has been headed in exactly the opposite direction. Only 11 states currently impose asset tests for SNAP eligibility. Just four years ago, in fact, Pennsylvania’s Democratic governor, Ed Rendell, abolished the state’s asset test.
And with good reason, as we can readily learn from two new freshly updated informational fact sheets on SNAP coincidentally published on Tuesday by the Center on Budget Policy and Priorities.
SNAP serves as the bedrock of the federal safety net. Ninety-two percent of SNAP’s $78 billion budget goes to benefits that can only be used to buy food. Seventy-five percent of SNAP participants are families with children. There are already plenty of restrictions in place that ensure that SNAP benefits primarily go to people who are legitimately poor. According to CBPP, “93 percent of SNAP benefits go to households with incomes below the poverty line, and 55 percent goes to households with incomes below half of the poverty line (about $9,155 for a family of three).”
SNAP gets high marks for low levels of waste and fraud, kicks into action quickly and efficiently when the economy craters, and is rated by the Congressional Budget Office as one of the two most effective forms of federal stimulus. Perhaps best of all, the number of recipients usually declines just as quickly when the economy rebounds. According to a recent study by the USDA, in the mid-2000s, “More than half of all new entrants to SNAP in the mid-2000s participated for less than one year and then left the program when their immediate need had passed.”
As the U.S. economy continues to recover, SNAP outlays will surely decline. So why hurry it along? Could it be because conservatives think there’s something fundamentally wrong with providing nutritional support? Or is it the racial angle — the intersection of poverty and race that encourages people like Newt Gingrich to call Obama “the food stamp president.”
The most charitable way to interpret Gingrich’s slur is as a critique of the president’s management of the economy: If he’d been a better president, fewer people would be eligible for assistance. But there’s also a deeper, darker level that connects the classic conservative antipathy to anything vaguely smelling of the nanny state. And the more one ponders that, the harder it is to fathom. The richest Americans skated through the Great Recession, while poor people lost their jobs and their homes and struggled to put food on the table. SNAP was there to help, to prevent the kind of pain and suffering that plagued American during the Great Depression, or that still afflicts citizens of less fortunate countries today. We should be thankful that Obama is the food stamp president; it’s a tribute to the progress inherent in becoming a civilized nation. We don’t let our citizens starve when Wall Street causes an international catastrophe. We should be proud of that.
By: Andrew Leonard, Salon, January 11, 2012
Religion, Patriotism And Freedom: Ayn Rand Vs. America
Ayn Rand has a large and growing influence on American politics. Speaking at an event in her honor, Congressman Paul Ryan said, “The reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand.”
A few weeks ago, Maureen Fiedler, the producer of the weekly radio show, Interfaith Voices, asked me to participate in a debate with Onkar Ghate, a senior fellow at the Ayn Rand Institute. I eagerly accepted. I wanted to hear how a follower of Rand would defend proposals to cut Medicare, Medicaid, and food stamps while exempting the wealthy from paying their fair share.
In one sense there was agreement. Maureen, a Sister of Loretto, argued that Republican budget proposals turned their back on Christ’s admonition to care for “the least among us,” the hungry, the sick, the homeless. Ghate did not dispute that. Rand, he said, was an atheist who did not believe in government efforts to help those in need.
Ghate countered Sister Maureen’s religious position with a moral argument. He maintained that redistribution of wealth was unfair to the rich and weakened the ambition of the rest. I wasn’t surprised by this position, since I’d heard it repeatedly during the fight on welfare reform.
What I did find startling was Ghate’s insistence that just as there should be a separation of church and state, so there should be a separation of economics and state. That notion really got me thinking.
I’ve always understood that one’s loyalty to God should take precedence over one’s patriotic duty. Churches are exempt from taxation, and conscientious objectors aren’t required to serve in war. Our high regard for the First Amendment shows the preeminence of faith in the American consciousness.
But to place economics on the same level as religious freedom seemed to me almost blasphemous. Are we really to believe that the freedom to make money should stand on the same level of religious liberty? Are the words of Milton Friedman equal to the Sermon on the Mount? I don’t think so. But maybe in the eyes of Ayn Rand and Paul Ryan, they are.
Ayn Rand’s biography goes a long way toward explaining her animus to government. Her first-hand experience of communism showed her how the state can crush people, kill dissent, and exile lovers of freedom to the gulag. Horrified by what government power could do, she was determined to shrink it to the point of impotence.
America was the perfect place for Rand’s single-minded celebration of the individual. After all, this was the nation that inspired intrepid emigrants to leave behind country, family, and friends with little more than the shirt on their back to make a new life. Here they wouldn’t be judged by what they were before or who their parents were but by what they could made of themselves.
America was a beacon of freedom from its earliest days. But the freedom to earn one’s living is not the same as the freedom to emasculate government. It’s a mistake to enshrine individual liberty without acknowledging the role that a good government plays in preserving and promoting it. Look at places like Haiti, Somalia, and the Congo to see what happens when governments aren’t around much.
When government is marginalized, it’s not just individual freedom that suffers; the economy suffers too. A vibrant capitalism requires a legal system: contracts must be honored, fraud punished. Markets have to work, and for that we need a strong infrastructure of roads, rail, energy, and water and sewage systems.
Good government sets us free to spend our days in fruitful endeavors, not evasive action motivated by fear and distrust. Government regulations reassure us that speeding drivers will be arrested, that the financial products we buy won’t cheat us, and that it will be safer to put our money in banks than under our pillows. If we can’t trust our food to be healthy, our drugs to be safe, or our planes to fly without crashing, we’ll waste a lot of productive time.
During the debate, I also raised the point that the separation of economics and state implies that businesses and the people who run them are under no obligation to be patriotic.
In the 19th century, the Rockefellers, Carnegies, Fricks, and J.P. Morgans wanted America to do well because their own fortunes were tied to American prosperity. They made America a great economic power by creating jobs and technological advances right here at home. They knew that their own fortunes were bound up with the well-being of their fellow Americans.
In Ayn Rand’s America, the first obligation of CEOs is to their shareholders, not to citizens. Their business is global, not local. Why should they care if they send jobs overseas? Why should they be concerned if American kids can’t do math or write a sentence? They’ll just outsource the work. Why should they worry that the next generation of Americans is going to have a tough time? Their own kids will do just fine. And in the meantime, they’re doing just fine themselves.
Andy Grove, the former CEO of Intel, sees a problem with this view. He writes, “You could say, as many do, that shipping jobs overseas is no big deal because the high-value work–and much of the profits–remain in the U.S. That may well be so. But what kind of a society are we going to have if it consists of highly paid people doing high-value-added work–and masses of unemployed?”
Don Peck makes a similar point in his new book, Pinched, and in an Atlantic cover story. “Arguably,” he writes, “the most important economic trend in the United States over the past couple of generations has been the ever more distinct sorting of Americans into winners and losers, and the slow hollowing-out of the middle class.”
Besides this economic problem, I also see a moral issue with Ayn Rand’s insistence that all of us, CEOs included, should be totally free of the ties that bind. I especially disagree when it comes to CEOs. As I wrote here a few months ago, the wealthy have a special responsibility. Much will be asked of those to whom much has been given. Participating in government and civic life, serving in war, helping the less fortunate, and–yes–paying a fair share of taxes are inescapable responsibilities for all Americans, especially for those who have realized the American dream that inspires us all.
I doubt there was anything I could have said in the debate that would have induced Onkar Ghate to view the meaning of freedom in a different light. I suppose he might say the same of me. Still, I can’t see how one can be free in a vacuum. Freedom takes work, by each of us, and by our government, to create the place where each of us can prosper. The freedom to sleep under a bridge is no freedom at all. We can only be free when we work together for the well-being of all Americans–including the least among us.
By: Kathleen Kennedy Townsend, The Atlantic, August 23, 2011
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