“Unjustified And Wrong”: The Poor Should Not Bear The Burden Of A Deficit They Didn’t Cause
GOP leaders in Congress who can’t stop talking about family values are proposing an array of deep cuts to food stamps, child tax credits, healthcare for the poor, and even block grants that help states with daycare and adoption assistance. Left untouched are military spending that has ballooned over the last decade and tax breaks for the richest Americans. This isn’t courageous or pragmatic. It’s fiscally irresponsible and morally wrong.
Religious leaders are not letting Rep. Paul Ryan—architect of the GOP budget proposal—get away with the fiction that this budget reflects the values of his Catholic faith. The U.S. Conference of Catholic Bishops has sent a series of letters to GOP-controlled House committees arguing that these cuts are “unjustified and wrong.” Bishops wrote this week that “a just framework for future budgets cannot rely on disproportionate cuts in essential services to poor persons” and bluntly conclude that “the proposed cuts to programs in the budget reconciliation fail this basic moral test.” Catholic leaders have called for “shared sacrifice,” putting “unnecessary military spending” on the table and—in a pointed critique of Republicans’ fiscal fantasy that we can balance the budget by cuts alone—reference the need for “raising adequate revenues.” When Representative Ryan recently spoke at Georgetown University, almost 90 professors and priests at the Catholic university urged him to stop distorting Catholic social teaching to advance his radical ideological agenda. Expect faith leaders to keep challenging budget proposals and economic policies that undermine bedrock principles of justice, compassion, and the common good.
We should not pit national security against economic security. An effective military and a responsive government that doesn’t turn its back on vulnerable families are both achievable if we move beyond false choices. The working poor struggling in minimum-wage jobs, the elderly, and a squeezed middle class did not cause our deficits. They should not be asked to bear the greatest burden.
By: John Gehring, Washington Whispers Debate Club, U. S. News and World Report, May 10, 2012
“Path To Salvation Doesn’t Pass Through Barbarity”: Bernie Sanders Brings The Anti-Austerity Fight to America
Bernie Sanders is as focused as any member of Congress could be on the struggles of the state he represents, and more generally on the challenges facing working people across the United States.
But that does not mean that the independent senator from Vermont fails to recognize when things are kicking up around the world—especially when those developments have meaning for the fights he is waging in Washington.
So it should come as little surprise that the news from Europe—of a democratic rejection of failed austerity policies—has caught his imagination.
Sanders knows that austerity is not just a European crisis. It threatens America as well. And he is highlighting what his Senate website recognizes as: “An Austerity Backlash.”
The senator is right to be excited that citizens are pushing back.
Sanders says Europe’s voters are sending a message that America’s voters can and should echo: the time has come to reject austerity measures that have unfairly burdened working families, while redistributing ever more wealth upward to millionaires and billionaires.
France on Sunday elected a new president, Socialist François Hollande, who campaigned on a promise to tax the very wealthy in order to free up funds for investment in job creation, education and social services.
Hollande rejects the attacks on unions and cuts to education and public services that have stalled European economies, promising that he will not casually continue the job-killing austerity policies foisted on Europe by bureaucrats and bankers.
There is, Hollande says, “hope that at last austerity is no longer inevitable.”
In Greece, the leader of the Syriza, the radical coalition that as a result of Sunday’s election results has leapt from the sidelines of politics to status as the nation’s second-largest party, is even more blunt in his rejection of austerity.
“We believe the path of salvation doesn’t pass through barbarity of austerity measures,” argues Syriza’s Alexis Tsipras.
Hollande and Tsipras are different players, with different styles and different policies.
Yet, their dramatic shows of strength in Sunday’s voting, along with similarly strong results for critics of austerity running in German state elections and Italian local elections, suggests that voters are fed up with the austerity fantasy that says the best response to tough times is a combination of tax cuts for the rich and pay and benefits for the workers.
What should Americans make of the results?
Sanders knows. The independent senator from Vermont, who has led the fight to preserve education, healthcare and social services funding in the face of proposals by House Budget Committee Chair Paul Ryan and his fellow proponents of an American austerity agenda, says the message sent by European voters can and should be echoed by American voters.
Yes, of course, the accent will be different, as will specific concerns and proposals. America is different from Germany, Greece and France.
But the threat posed by failed and dysfunctional policies is the same.
“In the United States and around the world, the middle class is in steep decline while the wealthy and large corporations are doing phenomenally well,” says Sanders. “The message sent by voters in France and other European countries, which I believe will be echoed here in the United States, is that the wealthy and large corporations are going to have to experience some austerity also and that that burden cannot solely fall on working families.”
Sanders is making the connections, recognizing the importance of a democratic push-back against policies that are as cruel as they are economically unsound.
“In the United States, where corporate profits are soaring and the gap between the rich and everybody else is growing wider, we must end corporate tax loopholes and start making the wealthy pay their fair share of taxes,” the senator explains. “At the same time, we must protect Social Security, Medicare and Medicaid. Austerity, yes, but for millionaires and billionaires, not the working families of this country.”
Sander is, of course, correct.
Let’s just hope that his message is echoed by other leaders in the United States.
Just as austerity is wrong for Europe, it’s wrong for the United States.
By: John Nichols, The Nation, May 7, 2012
“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
“At Odds With Reality”: Three Conservative Myths About Government
The Path to Prosperity blueprint of House Budget Committee Chairman Paul Ryan—the foundation for the budget that the House passed last week—reflects conservative politicians’ war on government. As my Center on Budget and Policy Priorities colleagues conclude about a Congressional Budget Office, or CBO, analysis of the Ryan plan:
The CBO report, prepared at Chairman Ryan’s request, shows that Ryan’s budget path would shrink federal expenditures for everything other than Social Security, Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and interest payments to just 3¾ percent of the gross domestic product (GDP) by 2050. Since, as CBO notes, ‘spending for defense alone has not been lower than 3 percent of GDP in any year [since World War II]’ and Ryan seeks a high level of defense spending…the rest of government would largely have to disappear.
The conservatives’ war is sustained by a series of myths.
Myth No. 1: Spending Is Out of Control, and Only Draconian Cuts Will Rein It In
As my colleagues at the center have shown, however, noninterest spending outside Social Security and Medicare spiked in the Great Recession but is scheduled to fall substantially as a share of GDP as the economy recovers (see chart).
To be sure, government spending will rise as a share of gross domestic product as the population continues to age, healthcare costs throughout the economy continue to rise, and more Americans become eligible for Social Security and Medicare. But, my Center on Budget and Policy Priorities colleagues have written:
When Americans hear talk of the government exploding in size and reach, they don’t usually think this means that more people will receive Social Security and Medicare because the population is growing older or that Medicare will cost more because of factors like the aging of the baby boomers and advances in medical technology that improve health and prolong life but at significant cost. Outside of those demographic and health cost factors, the portrait of a rapidly growing federal behemoth is simply at odds with reality, since costs are shrinking to levels well below their historical averages.
Myth No. 2: The Country Faces a Looming Debt Crisis Due to the Debt Incurred In the Past Few Years
That myth fueled irresponsible brinksmanship over legislation to raise the nation’s debt limit last year, and it stands in the way of meaningful deficit-reduction.
While the policies that Presidents Bush and Obama and Congress enacted to combat the financial crisis and Great Recession helped drive up deficits after 2007, those policies were temporary and will have little effect on deficits and debt going forward. The weak economy and the legacy other policies enacted under President Bush (especially his tax cuts) play a far larger role. Indeed, the Congressional Budget Office calculates that under current law (which calls for the Bush-era tax cuts to expire at the end of this year), deficits would fall over the coming decade as the economy improves, and debt would fall to 61.3 percent of GDP in 2022.
Yes, the gap between spending and revenues will rise again as a share of GDP in later decades if we don’t take prudent action to rein in future deficits. Policymakers and analysts who are not ideologically committed to radically shrinking government recognize that this will require a balanced mix of revenue and spending measures. But such a balanced policy runs up against myriad tax myths, including the following:
Myth No. 3: Americans’ Tax Burden Is High and Rising
That’s certainly the impression the Tax Foundation wants to convey in its latest “Tax Freedom Day” report released earlier this week: “Americans will work 107 days into the year, from January 1 to April 17, to earn enough money to pay this year’s combined 29.2% federal, state, and local tax bill. ”
But notice, the report does not refer to “every” American or the “typical” American. That’s because, as this Center on Budget and Policy Priorities report demonstrates, four out of five U.S. households likely pay a much lower average tax rate than the one highlighted in the Tax Foundation report. Moreover, average federal income rates are at historic lows for typical taxpayers. When total taxes, including federal and state and local taxes, are taken into account, the United States has one of the lowest average tax rates among all industrialized countries.
So, here’s the question:
Are those who advance these myths interested in fixing the deficit and debt problem, as most Americans would hope, or are they conducting a bait-and-switch in pursuit of antitax advocate Grover Norquist’s quest to “reduce [government] to the size where I can drag it into the bathroom and drown it in the bathtub?”
By: Chad Stone, Chief Economist at The Center on Budget and Policy Priorities, Published in U. S. News and World Report, April 5, 2012
“Attack Of The Right”: Ryan Budget A Disappointment To Conservatives
The conservative group Club for Growth said Wednesday that a Republican House budget plan authored by Rep. Paul Ryan (Wis.) is a “disappointment” to fiscal conservatives that falls short of making necessary cuts to balance the nation’s budget.
The group’s president said in a statement that Ryan’s plan does not put the country on a path to chop deficits quickly enough.
Chris Chocola also complained that that the budget largely waives massive cuts that are set to go into effect in January as a consequence for the failure of Congress’s special deficit reduction “supercommittee.”
According to the Budget Control Act — the hard-fought law that raised the nation’s debt ceiling over the summer — failure of the supercommittee was to trigger about $1.2 trillion in cuts over the next decade, split between military and domestic spending.
In Ryan’s budget, the so-called sequester–deeply unpopular to Republicans because of its powerful hit to defense–would be replaced. Tackling only the first year of the cuts—about $110 billion—his budget calls for instructing Congressional committees to come up with $18 billion in trims the first year and $116 billion over five years.
“It is hard to have confidence that our long-term fiscal challenges will be met responsibly when the same Congress that passed the Budget Control Act wants to ignore it less than one year later. On balance, the Ryan Budget is a disappointment for fiscal conservatives,” Chocola said in a statement.
Ryan’s budget also seeks to eliminate deficits by 2040. The Club for Growth has called for a budget that balances within the decade. Chocola said the budget contains “several important reforms and pro-growth policies” but is not enough.
“The Club for Growth urges Republicans to support a budget that balances in the near future and complies with the Budget Control Act,” he said.
The attack from the right comes as Ryan is facing a far more vigorous outcry from Democrats—who believe this plan slashes programs for the poor and elderly even while cutting taxes for the wealthy.
They have also complained that the Ryan plan slices agency budgets by $18 billion more than a year-long cap agreed to in the debt deal—a key concession made to conservatives whom Ryan will need to get his budget plan through the House.
With Democrats unified against Ryan’s plan, the Club for Growth statement could pose problems for its passage in the House if it persuades the GOP’s restive caucus to waver in its support.
Some centrist Republicans are also anxious about Ryan’s plan—fearful it will set the House on a path to another nasty clash with the Senate just weeks before the November election.
By: Rosalind S. Helderman, The Washington Post, March 21, 2012
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