mykeystrokes.com

"Do or Do not. There is no try."

“Republicans Are Plotting Economic Disaster For 2016: The American People Will Be The Collateral Damage

Since George W. Bush’s presidency, Republican economic ideas have become drastically more conservative. Instead of massive tax cuts for the rich coupled with a general tolerance of the rest of government (or even new welfare programs), the party is now committed to much larger tax cuts coupled with eye-watering cuts to government.

Every Republican presidential candidate proposes staggering tax cuts heavily weighted toward the rich. Donald Trump would give the top one-thousandth of taxpayers $1.3 million apiece per year, while Ted Cruz would give them an even $2 million. Trump does favor preserving the welfare state, but he is a marked outsider in this respect. The entire rest of the party is committed to gigantic cuts to welfare, as shown by the budget formulated by House Republicans. Their most recent plan would slash $5.3 trillion in spending over a decade, 69 percent of which would come from programs for the needy.

The party’s intellectual apparatus (distinct from the Trumpist insurgency) has more-or-less fully regressed to an economic libertarianism straight out of the 1920s. They view basically all government programs outside of the military and the courts as illegitimate, to be slashed or eliminated wherever possible. The only problem with this is that when you try it, the results are immediate disaster.

Republicans haven’t been able to fully implement their plan of tax and service cuts on the federal level, but they have tried it in a few places on the state level. Louisiana under Gov. Bobby Jindal has had it the worst. Jindal’s massive cuts to education and services were not nearly enough to cover his gigantic tax cuts, and draining every rainy day fund in the state only delayed the day of reckoning. Eventually the results were so disastrous that the unthinkable happened — a Democrat replaced Jindal. Now Gov. John Bel Edwards is scrambling to deal with the most extreme budgetary emergency of any state government in decades, working feverishly just to keep the state from literal financial collapse.

Kansas is also suffering from Republican quack economics. Gov. Sam Brownback (who barely scraped through re-election in 2014 and now sits at a 21-percent approval rating) tried the same tricks as Jindal, though to a somewhat lesser degree, and the results were similar: a huge budget deficit with none of the promised explosive growth or job gains. Now Kansas conservatives are running into problems with the state’s Supreme Court, which found legal problems with the distribution of education cuts. Their solution: Attack the justices politically, by drawing up a new impeachment law and trying to get them thrown out in an upcoming confirmation election.

It’s the same story in Wisconsin with both deficits and lousy economic performance. Gov. Scott Walker’s major innovation has been an effort to basically destroy the Wisconsin state university system with drastic cuts and the abolishment of tenure, which is already leading to serious problems at the flagship school in Madison.

However, it could have been worse for all these states. The federal government, with its grants, its spending on social programs, and its employment of in-state government workers and contractors, provides a buffer of spending state governments cannot cut. For example, Louisiana gets over 40 percent of its state budget from the feds, as well as $5,917 per person in social spending, $3.5 billion in federal contracts, and $5.3 billion in compensation paid to almost 68,000 federal workers (as of the most recent data). That’s $48 billion in income against $39 billion paid in federal taxes (other states don’t make out so well).

This means that the results would be far more disastrous should Republicans get to implement their ideas on a federal level. Great chunks of the federal programs — food stamps, federal health programs, the Earned Income Tax Credit, and so on — that have provided inadequate but vital economic stabilization would be cut or eliminated altogether.

The results would be just as what happened on the state level, only worse.

It took many years for Republicans to talk themselves out of the fact that Herbert Hoover’s presidency was a disastrous failure, but with the exception of Trump, Hooverism is where they stand. It’s an ideology that can gain wide popularity only insofar as it is not actually tried on a wide scale. It turns out that a vision of government that was already outdated a century ago (when farmers were over a quarter of the workforce) is not very well-suited to a modern economy. It’s just too bad the American people might have to be the collateral damage in re-learning that lesson.

 

By: Ryan Cooper, The Week, April 4, 2016

April 6, 2016 Posted by | Economic Policy, Republicans, Spending Cuts, Tax Cuts | , , , , , , , | 1 Comment

“There’s Plenty Of Money, Really”: Congressional Republicans Continue To Make Believe That Spending Cuts Are Good For Everyone

Don’t think for a second that congressional Republicans sincerely believe draconian cuts in federal spending stimulate the economy.

I know. They uniformly claim that spending cuts spark growth. But consider this.

During the 15-day shutdown of the federal government one and a half years ago, the United States lost some $24 billion in economic activity, according to a 2013 Standard & Poor’s report. Only Texas senator Ted Cruz and the conservative wing wanted the shutdown, while the rest of the Republican Party bore the brunt of cratering public opinion polls.

So when House Budget Committee chair Tom Price, a Georgia Republican, introduced a plan last month to cut more than $5 trillion in spending to balance the budget in nine years, take it for what it is — a purely political ploy to arouse conservatives in preparation for 2016.

The Price plan has no chance of becoming law with a Democrat in the White House, and a slim chance even with a Republican president. In repealing the Affordable Care Act and eviscerating food stamps while allocating tens of billions in defense spending (more than requested), it’s irresponsible. But in calling for the partial privatization of Medicare, it’s politically toxic. Beyond that, a Price plan put into law would be downright destructive. Sucking that much money out of the economy could possibly trigger, at the very least, another painful recession.

Still, congressional Republicans will continue to make believe that spending cuts are good for everyone, because like all make-believe stories, the Price plan has the advantage of sounding plausible. And because it sounds plausible, it feels persuasive to many voters. After all, growth is sluggish. Wages are flat. There isn’t enough money. It’s time to get serious and cut. That’s why Price titled his plan “A Balanced Budget for a Stronger America.”

In fact, there is enough money. Always has been. The trick is looking beyond one class of taxpayer dutifully paying its fair share to another class with the power, and the privilege, of avoiding paying its share.

According to a new report by Citizens for Tax Justice (CTJ), 304 of the 500 top U.S. corporations stashed more than $2 trillion in profits in offshore accounts in 2014, avoiding as much as $600 billion in U.S. taxes.

Among these are the most popular American brands: Apple, Nike, Microsoft, Safeway, and Clorox. These are among just 28 of the top 500 companies to report the tax rate they would pay if they had repatriated profits to the U.S. The rest didn’t bother. They don’t have to report.

But even those reporting to the IRS were probably lowballing their total U.S. tax liability. If they said they earned their enormous profits in tax havens, they probably didn’t, because the countries that shelter the money, like Bermuda or the Cayman Islands, don’t have economies that can produce such enormous profits. Those profits can only be earned in countries with robust economies like the U.S.

Furthermore, the foreign tax rate they paid was far lower than the tax rate they would have paid in the U.S. Indeed, the 28 firms bothering to tell the IRS what they would have paid in U.S. taxes paid a foreign tax rate of about 10 percent on a total of $470 billion. You almost certainly paid a higher percentage on less income.

Ironically, the offshoring trend has grown since the economic collapse of 2008, the very event Republicans cite when calling for more and deeper spending cuts. The CTJ survey found 77 firms increased their caches by at least $500 million while another seven U.S. companies — Apple, General Electric, Microsoft, IBM, Google, Oracle, and Gilead Sciences — piled high their cash hoards with more than $5 billion.

The trend is poised to become permanent. CTJ researchers report an acceleration of what’s known as “corporate inversions,” meaning American firms reincorporate in foreign countries to avoid paying most or all taxes on profits earned in the U.S.

And — no surprise here — the firms with the most money overseas are the first to lobby Congress to avoid paying taxes on that money. To stop this vicious cycle, CTJ researchers recommend putting an end to something called “deferrals,” an SEC rule that incentivizes tax sheltering. Then all profits earned by U.S. corporations anywhere in the world would be subject to U.S. taxes in the year they were earned.

The CTJ report does more than offer advice on creating a more equitable tax code. It reminds us that the frame of our budget debate is much too narrow. It is typically limited to spending, not revenues, much to the benefit of Republicans, while Democrats are left complaining about the unfair treatment of the middle class.

But the CTJ report does something else, something its authors don’t come right out and say. Our very narrow budget debate is as much about patriotism and national character as it is about justice and fiscal responsibility. Or at least it should be.

Billions and billions are hidden overseas while the rest of us are forced to fight over crumbs. That’s degrading and undignified but also unpatriotic. Prosperity is not only for the very few with the power to enjoy it. This isn’t feudal England.

This is America.

 

By: John Stoehr, The National Memo, April 14, 2015

April 15, 2015 Posted by | Federal Budget, Republicans, Spending Cuts | , , , , , , , | Leave a comment

“Why The House Republican Budget Plan Matters”: Predicated On The Assumption That Low-Income Families Have It Too Easy

“A budget is a moral document,” Rep. Rob Woodall (R-Ga.) said two weeks ago. “It talks about where your values are.”

Those comments from a conservative member of the House Budget Committee happen to be entirely accurate. Indeed, Woodall’s description serves as a reminder of why it matters that House Republicans passed their budget blueprint late yesterday.

Normally quarrelsome House Republicans came together Wednesday night and passed a boldly conservative budget that relies on nearly $5 trillion in cuts to eliminate deficits over the next decade, calls for repealing the health care law and envisions transformations of the tax code and Medicare.

There were a variety of competing plans, but the approach endorsed by the House GOP leadership narrowly prevailed – overcoming 26 defections from within their own ranks.

Republican leaders, who’ve had some trouble corralling GOP votes for GOP bills in recent months, breathed a sigh of relief, and Majority Whip Steve Scalise (R-La.) was seen hugging members of his whip team in celebration last night. It was a reminder of just how far expectations have fallen – House Republicans have their largest majority in generations; they struggled mightily to narrowly pass their own budget plan; and this is somehow seen as a great victory for Speaker John Boehner (R-Ohio) and the rest of the GOP leadership team.

The Senate Republican majority will now try to wrap up work on its budget blueprint – which will include key differences – before members eventually head to a conference committee to hammer out a bicameral agreement.

Note, budgets cannot be filibustered and are not subject to a presidential veto. In fact, much of this process is symbolic – a congressional budget does not lock in spending levels for policymakers; the appropriations process does. The entire budget fight is a less case of understanding what will happen and more a case of appreciating what congressional Republican would like to see happen if all the power were in their hands.

But if the practical effects are limited, why should people care? Because “a budget is a moral document; it talks about where your values are.”

This recent analysis from the Center on Budget and Policy Priorities struck a chord.

The budgets adopted on March 19 by the House Budget Committee and the Senate Budget Committee each cut more than $3 trillion over ten years (2016-2025) from programs that serve people of limited means. These deep reductions amount to 69 percent of the cuts to non-defense spending in both the House and Senate plans.

Each budget plan derives more than two-thirds of its non-defense budget cuts from programs for people with low or modest incomes even though these programs constitute less than one-quarter of federal program costs.

Right. If “a budget is a moral document” that reflects lawmakers’ “values,” the House Republican budget approved yesterday tells us, in frightening detail, that GOP morality is predicated on the assumption that low-income families have it too easy – and high-income families have it too tough.

It matters, of course, that Republicans had to rely on ridiculous budget tricks to give the appearance of responsibility. It also matters that they prioritized increased spending on the issue they care about (the military) over fiscal concerns they sometimes pretend to care about (the deficit).

But as the dust settles on yesterday’s floor drama, what remains are GOP “values” on full display. In 2015, Republican members of Congress believe in taking families’ health care benefits away. And scrapping Medicare altogether. And slashing food stamps. And making it harder for young people to go to college. And eliminating environmental safeguards. And freeing Wall Street of pesky oversight and layers of accountability.

In this “moral document,” GOP lawmakers spelled out their priorities for all the world to see. Sen. Bernie Sanders (I-Vt.) told reporters yesterday that when he talks to voters about the specific provisions of the Republican budget plan, the public balks – Americans assume he’s exaggerating, because the idea that GOP officials would actually vote for such a radical scheme seems “absurd.”

But the truth is, the Republican budget is real, it is cruel, and as of yesterday, it has passed.

 

By: Steve Benen, The Maddow Blog, March 26, 2015

March 27, 2015 Posted by | GOP Budget, Poor and Low Income, Spending Cuts | , , , , , , , | Leave a comment

   

%d bloggers like this: