It has become an article of faith among Republicans that President Obama's polices caused the deficit to soar. As a result, they claim we need to cut federal programs that assist low and middle income families because it is immoral to leave these bills to our children.
The problem is that it is just not true that the Recovery Act is responsible for the nation's projected deficits.
According to the non-partisan Congressional Budget Office, the Recovery Act and even TARP (the bank bail-out) are not responsible for projected deficits. That is because these policies are short term.
It's long term policies, like the high income Bush tax cuts, that stay in the system and remain unpaid for, that drive deficits.
The Great Recession played a major role by reducing tax revenues and triggering automatic stabilizers, existing counter cyclical laws, like unemployment compensation and food stamps, that automatically increase federal spending during a downturn and then decrease spending during a recovery. Check out the chart by the Center on Budget and Policy Priorities (CBPP) that illustrates that absent the Bush era tax cuts, the wars of choice in Iraq and Afghanistan and the downturn, there would be virtually no deficit.
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Showing posts with label deficit. Show all posts
Showing posts with label deficit. Show all posts
Saturday, October 13, 2012
What caused the deficit?
Friday, December 3, 2010
Republicans demand assistance for the rich; slam door on the unemployed
All indications are that the Obama administration will cave into Republican demands to extend the Bush era tax cuts for the rich, people making over $250,000 a year.
Not only only will this increase the deficit by $700 billion over the next decade, but it will do virtually nothing to promote economic growth since there is no evidence that high income tax cuts result in economic growth.
At the same time, the Republicans stopped Congress from extending unemployment benefits to 2 million Americans who have been unemployed for more than 26 weeks.
Not only is it cruel to deny financial support to American families who have lost their jobs, but it hurts the economy since unemployment benefits are a very effective form of promoting economic growth since the unemployed spend virtually every dollar they receive.
Rather than stand up for the nation's unemployed and for fiscal responsibility, President Obama has announced that he will freeze the pay of federal employees for two years. These public servants earn less than their private sector counterparts. More importantly freezing their pay has virtually no impact on the deficit since employee compensation is a very small component of federal expenditures. And it will actually weaken the economy since it will reduce spending at a time when the lack of demand threatens the very weak recovery.
In a little noticed blog a few weeks ago David Leonhardt, the New York Times economics reporter, asked: Why should we believe that extending the Bush tax cuts will provide a big lift to growth?
Those tax cuts passed in 2001 amid big promises about what they would do for the economy.
What followed?
The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7. (See chart above that is adjusted for inflation)
The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.
The picture does not change if you instead look at five-year periods. Here’s a chart ranking five-year periods over the past 50 years, in descending order of average annual growth:
I mean this as a serious question, not a rhetorical one: Given this history, why should we believe that the Bush tax cuts were pro-growth?
Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.
Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade.
The theory for why tax cuts should create growth and jobs is a strong one. When people are allowed to keep more of each dollar they earn, they are likely to work longer and harder. The uncertainty is the magnitude of this effect. With everything else that’s happening in a $15 trillion economy, how large of an effect on growth do tax cuts have?
Every available piece of evidence seems to suggest that the Bush tax cuts did little to lift growth. I have yet to hear a good argument to the contrary, but I’d be fascinated to see another blogger or an economist take a crack at it.
Those tax cuts passed in 2001 amid big promises about what they would do for the economy.
What followed?
The decade with the slowest average annual growth since World War II. Amazingly, that statement is true even if you forget about the Great Recession and simply look at 2001-7. (See chart above that is adjusted for inflation)
The competition for slowest growth is not even close, either. Growth from 2001 to 2007 averaged 2.39 percent a year (and growth from 2001 through the third quarter of 2010 averaged 1.66 percent). The decade with the second-worst showing for growth was 1971 to 1980 — the dreaded 1970s — but it still had 3.21 percent average growth.
The picture does not change if you instead look at five-year periods. Here’s a chart ranking five-year periods over the past 50 years, in descending order of average annual growth:
I mean this as a serious question, not a rhetorical one: Given this history, why should we believe that the Bush tax cuts were pro-growth?
Is there good evidence the tax cuts persuaded more people to join the work force (because they would be able to keep more of their income)? Not really. The labor-force participation rate fell in the years after 2001 and has never again approached its record in the year 2000.
Is there evidence that the tax cuts led to a lot of entrepreneurship and innovation? Again, no. The rate at which start-up businesses created jobs fell during the past decade.
The theory for why tax cuts should create growth and jobs is a strong one. When people are allowed to keep more of each dollar they earn, they are likely to work longer and harder. The uncertainty is the magnitude of this effect. With everything else that’s happening in a $15 trillion economy, how large of an effect on growth do tax cuts have?
Every available piece of evidence seems to suggest that the Bush tax cuts did little to lift growth. I have yet to hear a good argument to the contrary, but I’d be fascinated to see another blogger or an economist take a crack at it.
While no one has stepped up to answer Leonhardt's challenge, the Republican demand that the richest Americans be given a budget busting tax break has become a virtual certainty.
Friday, November 12, 2010
The Hijacked Commission
Nobel prize winning economist Paul Krugman asks how did a deficit-cutting commission become a commission whose first priority is cutting high income tax rates, with deficit reduction literally at the bottom of the list?
For his answer, read the column which is linked.
For his answer, read the column which is linked.
Friday, September 24, 2010
Republican Pledge's fuzzy math will bankrupt the country
Nobel Prize winning economist and New York Times columnist Paul Krugman writes:
On Thursday, House Republicans released their “Pledge to America,” supposedly outlining their policy agenda. In essence, what they say is, “Deficits are a terrible thing. Let’s make them much bigger.” The document repeatedly condemns federal debt — 16 times, by my count. But the main substantive policy proposal is to make the Bush tax cuts permanent, which independent estimates say would add about $3.7 trillion to the debt over the next decade — about $700 billion more than the Obama administration’s tax proposals.
True, the document talks about the need to cut spending. But as far as I can see, there’s only one specific cut proposed — canceling the rest of the Troubled Asset Relief Program, which Republicans claim (implausibly) would save $16 billion. That’s less than half of 1 percent of the budget cost of those tax cuts. As for the rest, everything must be cut, in ways not specified — “except for common-sense exceptions for seniors, veterans, and our troops.” In other words, Social Security, Medicare and the defense budget are off-limits.
So what’s left? Howard Gleckman of the nonpartisan Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020, while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won’t cut, is to completely abolish the rest of the federal government: “No more national parks, no more Small Business Administration loans, no more export subsidies, no more N.I.H. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress.”
The “pledge,” then, is nonsense. But isn’t that true of all political platforms? The answer is, not to anything like the same extent. Many independent analysts believe that the Obama administration’s long-run budget projections are somewhat too optimistic — but, if so, it’s a matter of technical details. Neither President Obama nor any other leading Democrat, as far as I can recall, has ever claimed that up is down, that you can sharply reduce revenue, protect all the programs voters like, and still balance the budget.
And the G.O.P. itself used to make more sense than it does now. Ronald Reagan’s claim that cutting taxes would actually increase revenue was wishful thinking, but at least he had some kind of theory behind his proposals. When former President George W. Bush campaigned for big tax cuts in 2000, he claimed that these cuts were affordable given (unrealistic) projections of future budget surpluses. Now, however, Republicans aren’t even pretending that their numbers add up.
So how did we get to the point where one of our two major political parties isn’t even trying to make sense?
The answer isn’t a secret. The late Irving Kristol, one of the intellectual godfathers of modern conservatism, once wrote frankly about why he threw his support behind tax cuts that would worsen the budget deficit: his task, as he saw it, was to create a Republican majority, “so political effectiveness was the priority, not the accounting deficiencies of government.” In short, say whatever it takes to gain power. That’s a philosophy that now, more than ever, holds sway in the movement Kristol helped shape.
And what happens once the movement achieves the power it seeks? The answer, presumably, is that it turns to its real, not-so-secret agenda, which mainly involves privatizing and dismantling Medicare and Social Security.
Realistically, though, Republicans aren’t going to have the power to enact their true agenda any time soon — if ever. Remember, the Bush administration’s attack on Social Security was a fiasco, despite its large majority in Congress — and it actually increased Medicare spending.
So the clear and present danger isn’t that the G.O.P. will be able to achieve its long-run goals. It is, rather, that Republicans will gain just enough power to make the country ungovernable, unable to address its fiscal problems or anything else in a serious way...
On Thursday, House Republicans released their “Pledge to America,” supposedly outlining their policy agenda. In essence, what they say is, “Deficits are a terrible thing. Let’s make them much bigger.” The document repeatedly condemns federal debt — 16 times, by my count. But the main substantive policy proposal is to make the Bush tax cuts permanent, which independent estimates say would add about $3.7 trillion to the debt over the next decade — about $700 billion more than the Obama administration’s tax proposals.
True, the document talks about the need to cut spending. But as far as I can see, there’s only one specific cut proposed — canceling the rest of the Troubled Asset Relief Program, which Republicans claim (implausibly) would save $16 billion. That’s less than half of 1 percent of the budget cost of those tax cuts. As for the rest, everything must be cut, in ways not specified — “except for common-sense exceptions for seniors, veterans, and our troops.” In other words, Social Security, Medicare and the defense budget are off-limits.
So what’s left? Howard Gleckman of the nonpartisan Tax Policy Center has done the math. As he points out, the only way to balance the budget by 2020, while simultaneously (a) making the Bush tax cuts permanent and (b) protecting all the programs Republicans say they won’t cut, is to completely abolish the rest of the federal government: “No more national parks, no more Small Business Administration loans, no more export subsidies, no more N.I.H. No more Medicaid (one-third of its budget pays for long-term care for our parents and others with disabilities). No more child health or child nutrition programs. No more highway construction. No more homeland security. Oh, and no more Congress.”
The “pledge,” then, is nonsense. But isn’t that true of all political platforms? The answer is, not to anything like the same extent. Many independent analysts believe that the Obama administration’s long-run budget projections are somewhat too optimistic — but, if so, it’s a matter of technical details. Neither President Obama nor any other leading Democrat, as far as I can recall, has ever claimed that up is down, that you can sharply reduce revenue, protect all the programs voters like, and still balance the budget.
And the G.O.P. itself used to make more sense than it does now. Ronald Reagan’s claim that cutting taxes would actually increase revenue was wishful thinking, but at least he had some kind of theory behind his proposals. When former President George W. Bush campaigned for big tax cuts in 2000, he claimed that these cuts were affordable given (unrealistic) projections of future budget surpluses. Now, however, Republicans aren’t even pretending that their numbers add up.
So how did we get to the point where one of our two major political parties isn’t even trying to make sense?
The answer isn’t a secret. The late Irving Kristol, one of the intellectual godfathers of modern conservatism, once wrote frankly about why he threw his support behind tax cuts that would worsen the budget deficit: his task, as he saw it, was to create a Republican majority, “so political effectiveness was the priority, not the accounting deficiencies of government.” In short, say whatever it takes to gain power. That’s a philosophy that now, more than ever, holds sway in the movement Kristol helped shape.
And what happens once the movement achieves the power it seeks? The answer, presumably, is that it turns to its real, not-so-secret agenda, which mainly involves privatizing and dismantling Medicare and Social Security.
Realistically, though, Republicans aren’t going to have the power to enact their true agenda any time soon — if ever. Remember, the Bush administration’s attack on Social Security was a fiasco, despite its large majority in Congress — and it actually increased Medicare spending.
So the clear and present danger isn’t that the G.O.P. will be able to achieve its long-run goals. It is, rather, that Republicans will gain just enough power to make the country ungovernable, unable to address its fiscal problems or anything else in a serious way...
Wednesday, July 21, 2010
Republicans want tax cuts for the rich, but nothing for the unemployed
Yesterday, the United States Senate finally mustered the 60 votes required to extend unemployment (UC) benefits to the 2.1 million Americans who had run out them.
This vote tells you all you need to know about the priorities of the Republicans who almost unanimously opposed providing the extension.
Fifteen million Americans are officially unemployed. If you include those who have dropped out of the labor market and involuntary part-time workers, the number soars to 23 million. Almost half, a record number, are considered long-term unemployed, having been out of work for six months or more. There are currently more than five people looking for work for every job opening.
But the Republican Senate leadership and all but two Republican Senators voted against extending unemployment benefits to the nation’s 2.1 million unemployed workers who had exhausted their benefits. Many, like Wisconsin Republican Senate candidate Ron Johnson, outrageously claim that providing the unemployed with benefits they have paid for and earned while working encourages them to remain unemployed.
The Republican hypocrisy is breathtaking.
While opposing the unemployment benefits extension as too expensive, they continue to push for legislation that would make the Bush era tax cuts, 50% of which went to the richest 1% of taxpayers, permanent.
The cost of extending unemployment benefits is $34 billion dollars. The cost of extending the tax cuts, $3 trillion over the next ten years!
The Bush tax cuts were originally sold as affordable because of a projected $5.4 trillion surplus. By the time they were passed in the spring of 2001, the rational had change. The $1.3 trillion tax cut was justified as the way to jump-start the economy that had plunged into recession in March 2001.
The tax cuts proved a very ineffective form of stimulus since the main beneficiaries of the cuts, those averaging $900,000 a year, were reluctant to spend their windfall. Unemployment benefits, on the other hand, are one of the most effective forms of stimulus because the unemployed immediately spend the money they receive. That’s why unemployment benefits are called an automatic stabilizer.
So the proposal to extend UC benefits is a twofer. It will help more than two million folks who have lost their jobs through no fault of their own and it will stimulate the struggling economy.
But that’s not good enough for the Republicans. Claiming to be concerned about the deficit, they say we need to curtail spending that assists working and middle class Americans. Extending unemployment benefits, funding mine, food, toy inspections and Social Security are too just expensive they claim.
In their world the nation simply cannot afford to regulate oil companies like BP, mining companies like Massey Energy and private banks like Goldman Sachs. But it is not to expensive to bail out banks, make upper income tax cuts permanent or maintain tax loopholes that allow hedge fund and private equity operators to pay tax rates at less than half the rate that working Americans pay and cost the nation $20 billion annually.
Let’s be honest. The Republicans aren’t concerned about you, your job or your paycheck. Nor are they concerned about the deficit. Their real interest is ensuring that unemployment remains high, depressing wages and enriching their cronies. That explains why they oppose extending unemployment benefits, proposals to prevent the layoffs of police, firemen and teachers and efforts to create public sector jobs. \
All of us should remember this come November.
This vote tells you all you need to know about the priorities of the Republicans who almost unanimously opposed providing the extension.
Fifteen million Americans are officially unemployed. If you include those who have dropped out of the labor market and involuntary part-time workers, the number soars to 23 million. Almost half, a record number, are considered long-term unemployed, having been out of work for six months or more. There are currently more than five people looking for work for every job opening.
But the Republican Senate leadership and all but two Republican Senators voted against extending unemployment benefits to the nation’s 2.1 million unemployed workers who had exhausted their benefits. Many, like Wisconsin Republican Senate candidate Ron Johnson, outrageously claim that providing the unemployed with benefits they have paid for and earned while working encourages them to remain unemployed.
The Republican hypocrisy is breathtaking.
While opposing the unemployment benefits extension as too expensive, they continue to push for legislation that would make the Bush era tax cuts, 50% of which went to the richest 1% of taxpayers, permanent.
The cost of extending unemployment benefits is $34 billion dollars. The cost of extending the tax cuts, $3 trillion over the next ten years!
The Bush tax cuts were originally sold as affordable because of a projected $5.4 trillion surplus. By the time they were passed in the spring of 2001, the rational had change. The $1.3 trillion tax cut was justified as the way to jump-start the economy that had plunged into recession in March 2001.
The tax cuts proved a very ineffective form of stimulus since the main beneficiaries of the cuts, those averaging $900,000 a year, were reluctant to spend their windfall. Unemployment benefits, on the other hand, are one of the most effective forms of stimulus because the unemployed immediately spend the money they receive. That’s why unemployment benefits are called an automatic stabilizer.
So the proposal to extend UC benefits is a twofer. It will help more than two million folks who have lost their jobs through no fault of their own and it will stimulate the struggling economy.
But that’s not good enough for the Republicans. Claiming to be concerned about the deficit, they say we need to curtail spending that assists working and middle class Americans. Extending unemployment benefits, funding mine, food, toy inspections and Social Security are too just expensive they claim.
In their world the nation simply cannot afford to regulate oil companies like BP, mining companies like Massey Energy and private banks like Goldman Sachs. But it is not to expensive to bail out banks, make upper income tax cuts permanent or maintain tax loopholes that allow hedge fund and private equity operators to pay tax rates at less than half the rate that working Americans pay and cost the nation $20 billion annually.
Let’s be honest. The Republicans aren’t concerned about you, your job or your paycheck. Nor are they concerned about the deficit. Their real interest is ensuring that unemployment remains high, depressing wages and enriching their cronies. That explains why they oppose extending unemployment benefits, proposals to prevent the layoffs of police, firemen and teachers and efforts to create public sector jobs. \
All of us should remember this come November.
Wednesday, April 21, 2010
Huge teacher layoffs threatened
One of the main reasons the United States developed the world's strongest and most innovative economy is that it invested in education.
The commitment to provide free, universal public education made it possible for tens of millions, the children of farmers, sharecroppers and workers, many of who were immigrants from Ireland, Eastern and Southern Europe, China and elsewhere, to master the language and numeracy skills they needed to contribute to the growth of the nation and its democracy.
In establishing the University of Virginia and in his support for land grant colleges like the University of Wisconsin, Thomas Jefferson established a national precedent of public support for higher education that has continued until recent years.
Progressive states like Wisconsin built on these traditions by investing in vocational schools which today have developed into the Wisconsin Technical College System, a sophisticated post- secondary education and training system that provides local industry with the skilled workers and technicians it needs.
But in the last few years, the nation's thirty year romance with reducing taxes has combined with the Great Recession to undermine education funding at all levels. The nation's public schools are now approaching, in the words of U.S. Secretary of Education Arne Duncan, "an education catastrophe" as state budget cuts will eliminate between 100,000 and 3000,000 teaching positions.
Last year the American Recovery and Reinvestment Act was responsible for preventing 342,000 teacher layoffs, 5.5% of the country's total K-12 teaching jobs.
But this year with no additional stimulus dollars massive layoffs are expected. 90% of the nation's school districts plan to layoff teachers in the fall, up from 66% last year.
Districts in California have given pink slips to 22,000 teachers. Illinois authorities are predicting 17,000 and New York is projecting another 15,000 position will have to be eliminated to balance the budget. Across Wisconsin from Milwaukee to the Fox Valley, from Madison to Stevens Point and Menasha, teaching positions are being cut. A record 13% of the nation's school districts are considering a four day school week.
Deficit hawks will argue that we have to live within our means; that we just can't afford to keep all of these teachers. They disingenuously assert that if we spend more federal money on teaching our children we have to cut other federal spending to prevent the deficit from growing even larger. They are proposing cuts in education in the name of the protecting our children and grandchildren from having to pay the nation's growing debts.
This is nonsense. 66% of the federal budget is non-discretionary spending like Social Security, Medicare and interest on the debt. It cannot legally be cut.
Half of the remaining third is national defense spending which is for all practical purposes non- discretionary when the nation is fighting two wars. That leaves only 17% of the federal budget that can be cut. And that 17% includes education, job training, veterans benefits, food stamps, unemployment benefits, justice, environment, and research and development. What exactly do they propose we cut to pay for education? Education? Job Training? Veterans benefits?
A nation that can't afford to educate its citizens is a nation that will not prosper.
Education is an investment in the future of the nation, its economy and its people. Most economists agree that it is necessary to go into debt to jump start the economy and or to make investments in education, science, research and development and infrastructure; investments that are the basis for increased economic growth and prosperity. If we fail to make these strategic investments, economic decline is assured.
Cuts on the scale being projected also threaten the nation's economy recovery. While the economy has begun to grow, unemployment and underemployment continue to hold back growth. The federal stimulus provided a temporary increase in demand that prevented the severe recession from becoming a depression. But most of that money has now been spent. Eliminating 300,000 teachers will lead to a significant reduction in demand that could undermine the weak recovery causing a double dip recession.
Iowa Senator Tom Harkin has proposed a $23 billion school bailout bill that will help schools across the nation avoid the catastrophic layoffs that are planned. Congress should pass this bill!
A year and half ago Congress bailed out CitiGroup, Goldman Sachs and other Wall Street banks. The deficit hawks didn't demand cuts in federal spending to provide Wall Street with hundreds of billions of dollars.
Is it more important for us to keep these private investment firms alive than it is to educate our young people? Are we more more committed to investing in Wall Street speculation than in the real economy and people that produce goods and services?
Congress needs to pass Senator Harkin's emergency education funding bill now. Otherwise, we will get exactly the kind of nation we won't pay for.
The commitment to provide free, universal public education made it possible for tens of millions, the children of farmers, sharecroppers and workers, many of who were immigrants from Ireland, Eastern and Southern Europe, China and elsewhere, to master the language and numeracy skills they needed to contribute to the growth of the nation and its democracy.
In establishing the University of Virginia and in his support for land grant colleges like the University of Wisconsin, Thomas Jefferson established a national precedent of public support for higher education that has continued until recent years.
Progressive states like Wisconsin built on these traditions by investing in vocational schools which today have developed into the Wisconsin Technical College System, a sophisticated post- secondary education and training system that provides local industry with the skilled workers and technicians it needs.
But in the last few years, the nation's thirty year romance with reducing taxes has combined with the Great Recession to undermine education funding at all levels. The nation's public schools are now approaching, in the words of U.S. Secretary of Education Arne Duncan, "an education catastrophe" as state budget cuts will eliminate between 100,000 and 3000,000 teaching positions.
Last year the American Recovery and Reinvestment Act was responsible for preventing 342,000 teacher layoffs, 5.5% of the country's total K-12 teaching jobs.
But this year with no additional stimulus dollars massive layoffs are expected. 90% of the nation's school districts plan to layoff teachers in the fall, up from 66% last year.
Districts in California have given pink slips to 22,000 teachers. Illinois authorities are predicting 17,000 and New York is projecting another 15,000 position will have to be eliminated to balance the budget. Across Wisconsin from Milwaukee to the Fox Valley, from Madison to Stevens Point and Menasha, teaching positions are being cut. A record 13% of the nation's school districts are considering a four day school week.
Deficit hawks will argue that we have to live within our means; that we just can't afford to keep all of these teachers. They disingenuously assert that if we spend more federal money on teaching our children we have to cut other federal spending to prevent the deficit from growing even larger. They are proposing cuts in education in the name of the protecting our children and grandchildren from having to pay the nation's growing debts.
This is nonsense. 66% of the federal budget is non-discretionary spending like Social Security, Medicare and interest on the debt. It cannot legally be cut.
Half of the remaining third is national defense spending which is for all practical purposes non- discretionary when the nation is fighting two wars. That leaves only 17% of the federal budget that can be cut. And that 17% includes education, job training, veterans benefits, food stamps, unemployment benefits, justice, environment, and research and development. What exactly do they propose we cut to pay for education? Education? Job Training? Veterans benefits?
A nation that can't afford to educate its citizens is a nation that will not prosper.
Education is an investment in the future of the nation, its economy and its people. Most economists agree that it is necessary to go into debt to jump start the economy and or to make investments in education, science, research and development and infrastructure; investments that are the basis for increased economic growth and prosperity. If we fail to make these strategic investments, economic decline is assured.
Cuts on the scale being projected also threaten the nation's economy recovery. While the economy has begun to grow, unemployment and underemployment continue to hold back growth. The federal stimulus provided a temporary increase in demand that prevented the severe recession from becoming a depression. But most of that money has now been spent. Eliminating 300,000 teachers will lead to a significant reduction in demand that could undermine the weak recovery causing a double dip recession.
Iowa Senator Tom Harkin has proposed a $23 billion school bailout bill that will help schools across the nation avoid the catastrophic layoffs that are planned. Congress should pass this bill!
A year and half ago Congress bailed out CitiGroup, Goldman Sachs and other Wall Street banks. The deficit hawks didn't demand cuts in federal spending to provide Wall Street with hundreds of billions of dollars.
Is it more important for us to keep these private investment firms alive than it is to educate our young people? Are we more more committed to investing in Wall Street speculation than in the real economy and people that produce goods and services?
Congress needs to pass Senator Harkin's emergency education funding bill now. Otherwise, we will get exactly the kind of nation we won't pay for.
Wednesday, March 31, 2010
Put America back to work- focus on jobs, not deficits
Op-Ed Columnist
The Magic Potion
By BOB HERBERT
With the marathon effort to overhaul the health care system behind us, it is time for the Obama administration to move quickly and powerfully to the monumental task of putting Americans back to work.
The just-say-no crowd will insist that we can’t afford a real effort to revitalize employment, that budget deficits are too high, that the economy will recover without additional government stimulus, that the president has used up most of his political capital, and that there isn’t much that government can do under any circumstances to create jobs.
Meanwhile, the United States is in real danger of sinking into a long-term economic funk. The recession is not over for the nearly 15 million people who are unemployed. Many of them have been out of work for longer than six months, a seeming eternity. Widespread joblessness and underemployment are threatening to become permanent features of the American landscape, corroding not just our standards of living but the very vibrancy of the American way of life.
Poverty and homelessness are increasing. More and more adult children, unable to find work, are living with their parents. The Times’s Michael Luo wrote in Monday’s paper about the increasing phenomenon of workers accepting jobs for which, in terms of their education and experience, they are considered overqualified.
Those who think some kind of robust recovery is hiding around the corner, just waiting to spring a pleasant surprise on us, are deluded. Too many families and individuals are tapped out. They’re struggling from week to week and month to month just to meet the necessities of housing, food and energy costs. Those crazed, debt-driven buying sprees that held the economy aloft for so long are over.
Foreclosure notices went out to 2.8 million households last year and that figure is expected to top 3 million this year. Nearly 1 in every 4 homes with mortgages is “underwater,” which means that the mortgage holder owes more on the property than it is worth.
You can’t get back to a robust economy without putting Americans back to work. The economy needs to be rebuilt on a solid foundation of good jobs at good pay, and many of those jobs will have to come from thriving new industries. This is a long-term project that demands big-time government involvement. It will require the kind of commitment — over an even longer period of time — that President Obama and the Democrats in Congress gave to their health care initiative.
Franklin Roosevelt had it right in his first Inaugural Address when he declared, “Our greatest primary task is to put people to work.” He underscored the urgency of the task when he said it should be treated “as we would treat the emergency of a war.”
The administration and Congressional leaders have been touting some recent legislation as “jobs bills,” but they are small-bore initiatives that will accomplish little. What is needed are bold new initiatives on several fronts. The federal government needs to do much more to help state and local governments that are in desperate fiscal straits because of falling tax revenues and are responding by laying off workers and cutting essential services.
A long-term program to rebuild the nation’s infrastructure (which was only made worse by the harsh winter) would create jobs and establish a sound industrial platform for 21st-century industries.
The transformation to a greener economy needs to be accelerated, and most of the manufacturing associated with that newer, greener economy should take place in the United States. And some new variation of the Works Progress Administration and the Civilian Conservation Corps should be developed to put economically distressed young people to work. What is happening to young, out-of-work and poorly educated American kids — not just in the big cities, but increasingly in suburban and rural areas, as well — is tragic.
The United States is a rich nation. To say that we cannot afford to do the things necessary to shore up the quality of our lives and establish a brighter future for coming generations is absurd. We always seem to have money for warfare and to bolster the interests of the monied classes.
As for the budget deficits, they will never be brought under control if Americans are not put back to work. Unemployment drives deficits by depriving the government of tax revenues and dramatically increasing the costs of safety-net programs and other public services. Putting Americans to work will ultimately make it much easier to begin bringing the deficits down.
The closest thing to a magic potion for individuals, families and the American economy is a job. F.D.R. understood that. The longer it takes for the rest of us to catch on, the deeper the long-term damage to the society will be.
The Magic Potion
By BOB HERBERT
With the marathon effort to overhaul the health care system behind us, it is time for the Obama administration to move quickly and powerfully to the monumental task of putting Americans back to work.
The just-say-no crowd will insist that we can’t afford a real effort to revitalize employment, that budget deficits are too high, that the economy will recover without additional government stimulus, that the president has used up most of his political capital, and that there isn’t much that government can do under any circumstances to create jobs.
Meanwhile, the United States is in real danger of sinking into a long-term economic funk. The recession is not over for the nearly 15 million people who are unemployed. Many of them have been out of work for longer than six months, a seeming eternity. Widespread joblessness and underemployment are threatening to become permanent features of the American landscape, corroding not just our standards of living but the very vibrancy of the American way of life.
Poverty and homelessness are increasing. More and more adult children, unable to find work, are living with their parents. The Times’s Michael Luo wrote in Monday’s paper about the increasing phenomenon of workers accepting jobs for which, in terms of their education and experience, they are considered overqualified.
Those who think some kind of robust recovery is hiding around the corner, just waiting to spring a pleasant surprise on us, are deluded. Too many families and individuals are tapped out. They’re struggling from week to week and month to month just to meet the necessities of housing, food and energy costs. Those crazed, debt-driven buying sprees that held the economy aloft for so long are over.
Foreclosure notices went out to 2.8 million households last year and that figure is expected to top 3 million this year. Nearly 1 in every 4 homes with mortgages is “underwater,” which means that the mortgage holder owes more on the property than it is worth.
You can’t get back to a robust economy without putting Americans back to work. The economy needs to be rebuilt on a solid foundation of good jobs at good pay, and many of those jobs will have to come from thriving new industries. This is a long-term project that demands big-time government involvement. It will require the kind of commitment — over an even longer period of time — that President Obama and the Democrats in Congress gave to their health care initiative.
Franklin Roosevelt had it right in his first Inaugural Address when he declared, “Our greatest primary task is to put people to work.” He underscored the urgency of the task when he said it should be treated “as we would treat the emergency of a war.”
The administration and Congressional leaders have been touting some recent legislation as “jobs bills,” but they are small-bore initiatives that will accomplish little. What is needed are bold new initiatives on several fronts. The federal government needs to do much more to help state and local governments that are in desperate fiscal straits because of falling tax revenues and are responding by laying off workers and cutting essential services.
A long-term program to rebuild the nation’s infrastructure (which was only made worse by the harsh winter) would create jobs and establish a sound industrial platform for 21st-century industries.
The transformation to a greener economy needs to be accelerated, and most of the manufacturing associated with that newer, greener economy should take place in the United States. And some new variation of the Works Progress Administration and the Civilian Conservation Corps should be developed to put economically distressed young people to work. What is happening to young, out-of-work and poorly educated American kids — not just in the big cities, but increasingly in suburban and rural areas, as well — is tragic.
The United States is a rich nation. To say that we cannot afford to do the things necessary to shore up the quality of our lives and establish a brighter future for coming generations is absurd. We always seem to have money for warfare and to bolster the interests of the monied classes.
As for the budget deficits, they will never be brought under control if Americans are not put back to work. Unemployment drives deficits by depriving the government of tax revenues and dramatically increasing the costs of safety-net programs and other public services. Putting Americans to work will ultimately make it much easier to begin bringing the deficits down.
The closest thing to a magic potion for individuals, families and the American economy is a job. F.D.R. understood that. The longer it takes for the rest of us to catch on, the deeper the long-term damage to the society will be.
Thursday, March 13, 2008
Republicans propose $200 billion tax cut for the super rich!
The inheritance tax is a tax on inherited wealth that is paid by the very wealthiest of American families, the Rockefeller's, Hilton's, DuPont's, Kennedy's and Vanderbilt's to name just a few.
These are the rarefied folks who were born with a silver steam shovel in their mouths!
It was one of their own, Republican President and former rough rider, Teddy Roosevelt, who first proposed a tax on inherited wealth, although it did not become law until 1916, eight years after he left office.
Roosevelt believed that the transmission of enormous wealth to young men ''does not do them any real service and is of great and genuine detriment to the community at large.''
What really mattered, according to Roosevelt, was to have a national community based on citizens' political equality, relative economic equality and interdependence.
For Roosevelt, the inheritance tax was a moral issue as well as an economic one. ''If ever our people become so sordid as to feel that all that counts is moneyed prosperity, ignoble well-being, effortless ease and comfort,'' he warned, ''then this nation shall perish, as it will deserve to perish, from the earth.'' Wealth, he declared, should only be ''the foundation on which to build the real life, the life of spiritual and moral effort and achievement.''
His cousin President Franklin Roosevelt echoed these themes in the middle of the Great Depression when he argued: ''The transmission from generation to generation of vast fortunes by will, inheritance or gift is not consistent with the ideals and sentiments of the American people...'Inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government.''
Not according to the modern Republican Party whose Senator Jon Kyl ( R, Arizona) is proposing a $200 billion inheritance tax cut for the wealthiest Americans. Most of the windfall would go to estates valued at more than $10 million per person, the richest 0.1 percent.
The government would have to borrow to make up for this $200 billion giveaway to rich heirs, worsening the deficit and adding about $100 billion in interest to the nation’s tab. To put it simply you, your children and grandchildren would finance this tax cut for the super rich!
The New York Times editorialized against this irresponsible money grab today. It is linked here.
These are the rarefied folks who were born with a silver steam shovel in their mouths!
It was one of their own, Republican President and former rough rider, Teddy Roosevelt, who first proposed a tax on inherited wealth, although it did not become law until 1916, eight years after he left office.
Roosevelt believed that the transmission of enormous wealth to young men ''does not do them any real service and is of great and genuine detriment to the community at large.''
What really mattered, according to Roosevelt, was to have a national community based on citizens' political equality, relative economic equality and interdependence.
For Roosevelt, the inheritance tax was a moral issue as well as an economic one. ''If ever our people become so sordid as to feel that all that counts is moneyed prosperity, ignoble well-being, effortless ease and comfort,'' he warned, ''then this nation shall perish, as it will deserve to perish, from the earth.'' Wealth, he declared, should only be ''the foundation on which to build the real life, the life of spiritual and moral effort and achievement.''
His cousin President Franklin Roosevelt echoed these themes in the middle of the Great Depression when he argued: ''The transmission from generation to generation of vast fortunes by will, inheritance or gift is not consistent with the ideals and sentiments of the American people...'Inherited economic power is as inconsistent with the ideals of this generation as inherited political power was inconsistent with the ideals of the generation which established our Government.''
Not according to the modern Republican Party whose Senator Jon Kyl ( R, Arizona) is proposing a $200 billion inheritance tax cut for the wealthiest Americans. Most of the windfall would go to estates valued at more than $10 million per person, the richest 0.1 percent.
The government would have to borrow to make up for this $200 billion giveaway to rich heirs, worsening the deficit and adding about $100 billion in interest to the nation’s tab. To put it simply you, your children and grandchildren would finance this tax cut for the super rich!
The New York Times editorialized against this irresponsible money grab today. It is linked here.
Saturday, October 13, 2007
Bush administration's fuzzy math
Last week the Bush administration reported that the U.S. budget deficit had fallen to $162.8 billion, the lowest amount in five years.
Don't believe it.
Fortune's Allan Sloan had predicted the Bush celebration in early September arguing the deficit is much, much bigger than you think.
See Jack Cafferty's refutation of the Bush administration's "fuzzy math."
Don't believe it.
Fortune's Allan Sloan had predicted the Bush celebration in early September arguing the deficit is much, much bigger than you think.
See Jack Cafferty's refutation of the Bush administration's "fuzzy math."
Monday, October 1, 2007
Milwaukee Journal: perscribes wrong deficit reduction medicine
A Milwaukee Journal editorial recently opined that "A Republican Congress abandoned its principles and left the country ill-prepared to meet long-term obligations." "Fiscal discipline is needed" it concluded.
The piece criticised the $190 billion 2002 Farm Bill, 70% of which went to the richest 10% of farmers. It also targeted the new Medicare prescription drug benefit.
Both could charitably be described as socialism for the rich-U.S. agribusiness, insurance and pharmaceuticals companies!
While they are poorly designed public policy, neither is at the heart of the deficit problem.
By failing to identify how the Bush administration has squandered a projected $5.2 trillion surplus, the Journal is fueling the erroneous perception that out of control social spending and entitlements are to blame.
Nothing could be further from the truth
The two main causes of the Bush era deficits are its high end tax cuts and the War in Iraq.
Congressional Budget Office data show that Bush's tax cuts have been the single largest contributor to the reemergence of substantial budget deficits. Legislation enacted since 2001 has added almost $2.3 trillion to deficits between 2001 and 2006, with half of the deterioration in the budget due to the tax cuts (about a third was due to increases in security spending, and only a sixth to increases in domestic spending).
56.5% of these tax cuts went to the richest 10% of wage earners, those averaging $256,000. Only 14.7% went to the bottom 60% who average $44,000.
Unlike in previous wars, the United States has cut taxes at the same time it has increased military spending."It's fair to say all of the money spent on the war has been borrowed," says Richard Kogan, a senior fellow at the Center on Budget and Policy Priorities, a think tank in Washington. "But eventually everything has to be paid for."
And the bill is growing!
Just last week President Bush requested an additional $42.3 billion in “emergency” funding for Iraq and Afghanistan. If passed, the 2008 war bill will be almost $190 billion, the same as the 10 year Farm Bill increase the Journal singled out for criticism and the largest single-year total for these wars. It is an increase of 15 percent from 2007.
It will bring the year end total for the Iraq and Afghanistan wars since Sept. 11, 2001 to $800 billion, still less than half the $2 trillion total projected cost.
As Illinois Senator Everett Dirksen once said about the Defense budget, "a billion here, a billion there, pretty soon you're talking about real money"-money that could buy a lot of healthcare, infrastructure, early childhood education or deficit reduction!
What it hasn't bought is protective equipment for our soldiers and their vehicles, the capture of Osama Bin Laden or adequate medical care for our vets!
And remember this $42 billion military increase is off-the-books, "emergency" funding, an addition to the original 2008 spending request, made before the President announced his so-called “new strategy” of partial withdrawal.
Iraq alone has cost the United States more in inflation-adjusted dollars than the Gulf War and the Korean War and will soon pass the Vietnam War.
This for a war that former Defense Secretary Donald Rumsfeld promised would cost under $50 billion while his deputy, Paul Wolfowitz, predicted Iraqi oil revenues would largely pay for Iraq’s reconstruction.
The $42 billion emergency funding increase is more than the bipartisan, fully funded $35 billion expansion of the State Children’s Health Insurance Program (SCHIP) that President Bush has promised to veto.
Since Iraq costs the country $333 million a day, we can't afford to expand SCHIP which costs $19 million a day!
The $42 billion is also almost twice as much as the $23 billion in improvements for waterways and water systems in every state that Bush is threatening to veto as too costly.
Mr Bush took office in 2001, the last time the Government produced a budget surplus. Every year after that the Government has been in the red. In 2004 the deficit swelled to a record $US413 billion ($494 billion).
The Journal is right when it suggests that Mr Bush is mortgaging the country's future. But it is wrong to suggest that entitlements and social spending are to blame.
High end tax cuts and Mr Bush's war of choice in Iraq are the real culprits!
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