I have been arguing for a long time that progressives need to be aggressively engaged in the deficit cutting debate. I think it is a mistake for us, both policy wise and especially politically, to say that deficits don't matter, or to have an entirely defensive message about the cuts we don't want Congress to make. Voters believe deficits matter, and they want solutions - and while it is currently unpopular to cut Social Security and some other programs (thank goodness), if no alternative to that is presented, too many folks might be convinced to go along.
The progressive message on the deficit has to be very clear: first, don't do anything that will endanger our economic recovery, because the best way to solve the deficit is to improve our economic health (see: the 1990s). Secondly, when you ask for sacrifices, they shouldn't be all or mostly from the middle class and poor. This is a pretty key point, since many of the deficit hawks seem to be zeroing in on cuts in Social Security and a Value Added Tax, both of which overwhelmingly impact the poor and middle class far more than they do the wealthy.
What these proposals are is an attempt to make middle and lower income people pay for the sins of the wealthy who have benefited from the deficit. Middle class incomes have been stagnant over the last decade, while the costs of their groceries, gas, utilities, and college education for their kids has skyrocketed. Middle class housing prices have plummeted the last three years, with foreclosures and bankruptcies increasing exponentially. Middle class folks haven't gotten the big tax cuts the wealthy have over the last 10 years, and when taxes are raised at the local level, its almost always regressive taxes like the sales tax that impact poor and middle class people the most. Meanwhile, public school teachers, social services for the poor, parks, libraries, community colleges, programs to help handicapped kids - all of those programs that matter to working families are the things that get cut.
So now we have this gaping federal deficit. Economics and budget experts tell us it is caused by:
1. The massive tax cuts, overwhelmingly targeted to the wealthy, that George W. Bush gave us.
2. Two big wars, which we are still paying for many years after their launch.
3. Health care inflation caused by skyrocketing drugs, provider, and insurance rates.
4. A bloated defense budget that hasn't been closely examined for waste in at least 15 years.
5. The economic collapse of 2008 which resulted in massive bailouts of big banks, and caused unemployment to skyrocket, and housing prices and incomes to dramatically fall.
6. Offshore tax shelters, big corporate tax loopholes, and corporate subsidies of various kinds written into the budget.
7. A big farm bill with absurd subsidies to big, wealthy agribusiness interests.
So just to summarize here: the deficit is caused by tax cuts for the rich, an economic collapse caused by wealthy bankers which resulted in bailouts for those wealthy bankers plus massive pain for middle income and poor people, tax loopholes and corporate subsidies designed to help the wealthy, plus two wars and wasteful defense spending (much of which goes into the pockets of wealthy defense contractors). And the solution for the deficit hawks: target middle class and lower seniors for social security cuts, and put in a regressive tax that is a burden to low and middle income people.
Justice: American style.
Elites are selling this as a grand compromise: Conservatives get Social Security cuts, and liberals get a tax increase. Oh, boy. My question is: what do regular folks get out of the deal besides screwed?
Progressives ought to be screaming bloody murder at this phony compromise, but we also ought to have a constructive alternative on how we end the budget deficit. There are plenty of budget cuts we can live with: ending wasteful defense spending, take away subsidies to the big corporate farms, put a strong public option in health care reform, have the federal government negotiate drug prices, end the wars in Iraq and Afghanistan. There are plenty of taxes we can raise that wouldn't soak the people who have been most hurt by the economy of the last decade, including a financial transactions tax on the big banking speculators, an end to the corporate tax loopholes and offshore tax avoidance, bringing taxes on the wealthy back to the level they were before the Reagan tax cuts.
If you did all that, even waiting another year or two to let the economy get on a firmer footing, you could easily balance the budget before the 2010 decade is out and have plenty of money left over to invest in the infrastructure and schools that we so desperately need.
If you want to solve the deficit, target the folks whose time at the money trough caused it in the first place: the big banks, the defense contractors, the drug and insurance companies, the agribusiness giants, and the super wealthy that got all of those huge tax cuts in the first place.
David Sirota: The Michael Jordan of Bailouts
http://en.wikipedia.org/wiki/Deficit
For a business that makes $1,000,001 per year or less, you cut their total payroll taxes in half, with an immediate cut or a tax credit, whichever is seen as making the most sense. From there, your have an escalating scale, where the payroll tax cut lessens, until you get to a business that makes $5,000,000 per year or more, where they are responsible for the full payroll tax. As a baseline figure, for your business to be eligible, you must have total assets of less than $25 million.
You balance the budget, and in a move for economic growth, you create a small structural deficit to subsidies the efforts of truly small businesses.
A tough path forward, but a path forward that is clear and honest, while alos not trying to sugarcoat anything or lie to anyone.
-Continue with the effort put forward by Sec. Gates, re-evaluating what weapons systems are actually needed for our armed forces, regardless of how the jobs play out in individual districts. If gates and his team decide that a weapon system isn't needed, it should be eliminated or replaced with something that they feel is needed.
-Evaluate and fix the problems within our entitlement programs. Instal a permanent doc fix for Medicare reimbursements. Address the cost concerns of Social Security. Write into law that funds going to Social Security are prohibited from use in other areas of the budget. No IOU. No nothing. After a thorough analysis, do everything neccesary to make Social Security sustainable while doing everything in your power to ensure that benefits are not cut. Raise the eligibilty age to 65, or whatever is deemed neccesary, and raise payroll taxes.
-Eliminate the private insurance subsidy that's been messaged into folks believing is actually Medicare, and incorporate those benefits into the actual Medicare program. And actually pay for it.
-Go after everything else that we spend money on, evaluating the use of every dollar, from education to energy.
-Pass a tough, comprehensive immigration bill, tougher than what a lot of amnesty supporters would like to see, to expand the tax base a bit.
No of it easy, but all neccesary
And yet, in the face of all of that, with reasonable but undeveloped solutions being presented, all you can do is try to harp back to some notion that all I'm suggesting is harming the middle class in this country. Are you being serious?
We are in the current economic situation because, in layman's terms, AIG's financial services division that focused almost solely on subprime mortgage derivatives contracts was so overleveraged that its' iminent collapse dropped a capital scare on the entire market that was so serious that banks refused to loan money to anyone, even other banks, because of how sure they were on their asset positions. And, to make matters worse, the failure of Lehman Brothers crystalized this belief in folks' minds to the point that capital didn't flow. Simple as that.
As much as you want to make the clowns on here feel all cozy about it, you're not going to be able to clean all that up by bashing the top 1%, while leaving the bottom 95% unscathed. That just doesn't make any sense.
What's even worse is that you're out front parrotting nonsense solutions like drastically cutting military defense spending, immediately ending two active combat situations, and hampering the efforts to continue producing all of the lifesaving drugs that our domestic sector produces. Get over yourself.
The second that you actually want to put forward some decent solutions, most folks might pay attention to you. Until then, you're just going to have to keep harping to the clowns.
If you want to flame me, so be it. Until you start to back actual feasible solutions, instead of some fools notion about eliminating defense spending, have fun shouting at the wall with the deficit not changing.
The simple fact of the matter is these folks actually do end up having to front pretty ridiculous tax bils; the only relevant difference being that the tax code is written in a way to have them write off much of the tax bill anyway. Get your fact straight.
Given that labor adds value to raw products by turning them into something more useful along each step of the way and thus creating tangible wealth
then
Why is labor taxed as high as 37.5% (28% for most people), but capital is taxed at only 15%?
The problem is that the leaders of our economy are being given bad advice. They're being told that the risk of future taxation is what is stifling business (no evidence of this). They're being told that we are in risk of rapid inflation (actually, deflation is the risk). They're being told that the government is at risk of default (no risk of default yet). Even the President, a democrat, has been swayed by this bad advice. And, at the end of the day, the noblesse, the bourgeois, and the sans-culotte will all be hurt by deficit reduction.
That, and people need to recognize that Keynesian economics has a place in our economy. I'm not saying that everything Freidman wrote needs to be abandoned, but this most recent crisis should make it apparent that the Austrian school, as it exists today, is intellectually wrong.
You just sound like Rick Mayal's character in "The Young Ones."
The idea that SS is government spending is absurd. It is an insurance program run outside the government's operating budget.
It is certainly NOT an entitlement program. I PAY premiums every week into the system and I expect my full BENEFIT. The term "social security" was used by Republicans who wanted people to think it was a socialist program. The real name is Old Age, Survivors and Disability Insurance.
Republicans should try cutting my homeowners or auto insurance "entitlement." When my car is totalled and my insurance company cuts a check for, say, 20K for another car, is that an ENTITLEMENT?
When a hurricane blows the roof off my house and the insurance company pays to repair it, is that a government program?
Working people need to get right and get right in the face of anyone who looks to touch SS, including raising the retirement age.
If 65 is too young to retire, then why do 70% of people retire at 62?
The funding issue? The same Reagan-Greenspan solution from 1983: Make the payroll tax cover 90% of the wage base. today, because of increases in income, it only covers 80% of the wage base.
There's your answer; problem solved for another 75 years.
SS taxes end at the 90k line, thereabouts. Drop any limit on that one and you'd gain a hell of a lot.
1) Why don't more people get a tax cut? Because over 45% of American tax filers do not pay ANY federal income taxes and not everyone files taxes. You can not cut nothing.
2) We will not pay off the wars if we continue to add extra unfunded government programs. That just makes the problem worse.
3) The health care bill will not significantly reduce premiums. It will not reduce health care costs. It will only change who pays. Again you have not fixed the problem.
4) The defense budget along with every other part of the federal budget needs to be closely examined EVERY year. If it isn't then congress is not doing their job.
5) The whole tax code needs to be simplified and holes plugged.
6) All subsidies should be eliminated. Farm and corporate. Also all pork should be eliminated. If a tea pot museum is that important to a community then that community should pay to build it, not tax payers 2500 miles away.
7) Why should federal money be taken out of a community, sent to Washington, have 30% lost in paperwork, only to send it back to where it was needed and came from. Local people know best what the needs are in their area. Let them decide what they need and how to pay for it. You will find that when people have to pay for it themselves it is no longer a great need.
2. Let's raise taxes to fund wars, instead of using war as an excuse for not funding other needed programsese loopholes., like border security and disaster relief.
3. Time will tell.
4. Start with the 200 billion cut the SECDEF says can be done right now.
5. Everyone says this, but face it, the wealthy make out like bandits with the loopholes.
6. Then red states would wither on the vine, since they depend on blue states paying more to the Fed.
7. Local government is the MOST intrusive and most costly in the lives of average persons. My federal taxes have only gone done in the last few decades. Last week my state taxes went up 12%. And don't get me started on local fees and property taxes. There os TOO much local government (state, county, city.)
2) Raising taxes slows the economy and does not increase total revenue.
3) Both the GBO and Fact check agree with me.
4) Lets cut all government spending to the 2008 level. That alone will save 25%.
5) then plug the holes.
6) Red states pay less because their citizens have lower incomes. So you advocate raising taxes on the poor?
7) Local taxes are the most intrusive because people get more services from the local level...schools, fire, police... If you live in NY, NJ, MA or CA you probably right about too much government. If you live in states without an income tax you will find government is less of a burden...and not missed.
1) 45% don't pay, because they don't make enough (i.e. are TOO POOR) to pay. How did that happen? Comparing a graph of the stock market growth with the GDP growth will enlighten you; there has been a MASSIVE transfer of wealth to the rich.
2) I agree. Why did Republican fight the reinstatement of 'pay as you go'?
3) I also agree. But it contains some critically necessary changes (more people covered, no dropping people with pre-existing conditions, etc.). If gov't is so incompetent, why are the insurance companies so afraid of a public option???
4) True. But we can't afford two wars, on top of a 'defense' budget larger than the next four countries, combined. Note that doing what we are doing in Afghanistan will get us only to bankruptcy, not success.
5) Yes. Also, the tax code should NOT be used to mess with market forces, e.g., lower cap gain taxes only encourages gambling.
6) I agree. However, I am not against federal support of crop insurance, if it can't be done through the private insurance sector.
7) I agree in theory, sort of, but as a counter-example, I believe Medicare eats up about 2%. So where do you get the 30% figure?
2) We need a pay for the past program too. The current Congress does not even believe in pay as you go.
3) How can an insurance company stay in business if the government mandates they cover someone today needing a $400,000 operation? Insurance companies ate like an ATM. You need to put money in BEFORE you need the treatment not after. Insurance companies are afraid of the public option because it is not a level playing field. The public option is subsidized by the government, the government is exempt from suits, and the government writes the rules and does not have to follow them.
4) What we are doing with the stimulus plan and health care will bankrupt the government also.
5) We agree on simplifying taxes.
6) Why should the gederal government be in the insurance business?
7) If medicare only eats up 2% in unnecessary expenses then where are we going to get the $500,000,000,000.00 savings in medicare that was factored into the financing of the health care bill?