Weekly Audit: A Progressive Deficit Fix?

by Lindsay Beyerstein, Media Consortium blogger

The co-chairs of the 18-member deficit commission issued a preliminary presentation two weeks ago that favored tax breaks for the wealthy and left open the possibility of deep cuts to Social Security, Medicare and other social programs. But there’s still time for the commission to radically reshape its message before it issues its final report.

Jan’s plan

That’s exactly what progressive Rep. Jan Schakowsky (D-IL) is trying to bring about. Schakowsky is a member of the commission and she has an alternative, progressive plan to rein in the deficit, as David Moberg reports for Working in These Times:

It would not go into effect until 2015 or after unemployment subsides, and it provides for $200 billion of job-creating investments during the next two years, in addition to reducing the deficit by $441 billion in 2015, nearly double Obama’s target. Slightly more than a third of Schakowsky’s proposed deficit reduction would come from new revenue (mostly tax changes hitting the wealthy and corporations but also from cap-and-trade carbon emission controls), 30 percent from ending or reforming tax expenditures (again, mainly benefiting rich taxpayers), a quarter from defense cuts, and 9 percent from mandatory programs (like offering a public option for health insurance and requiring Medicare to bargain over drug prices). Though Social Security does not contribute to the deficit, Schakowsky plans to secure future payouts without benefit cuts by increasing how much the wealthy pay into the retirement program.

A public option for health insurance would keep rising health care costs in check because insurers would have to compete with non-profit, government-administered insurance. Instead of cutting Social Security benefits for the needy, Schakowsky would simply eliminate the arbitrary payroll tax ceiling on high earners. Sounds like common sense, doesn’t it?

A coalition of progressive groups calling itself Our Fiscal Security unveiled its own alternative proposal for cutting the deficit on Monday, Luke Johnson reports for the Colorado Independent. Key planks of the platform include repealing the Bush tax cuts, reinstating the estate tax for married couples with assets greater than $4 million, and capping itemized deductions at 15%. Coalition members include Demos, the Century Foundation, and the Economic Policy Foundation.

Generation Recession

Young adults have the highest unemployment rate of any demographic. At the National Radio Project, Rina Palta examines the impact of joblessness on the nation’s 80 million “Millennials.” (Audio) Palta talks to young people who are weathering their first layoffs mere weeks or months after landing their first professional jobs.

Mark Kirk: Tax Cuts for the Rich “No Matter What”

The day before 2.5 million Americans stand to lose their unemployment benefits, Sen. Mark Kirk (R-IL) went on TV to insist that unemployment insurance is misguided and that the government must cut taxes for the rich “no matter what,” Julianne Escobedo Shepherd reports in AlterNet.

Oddly enough, Kirk fancies himself a moderate by Republican standards, according to Steve Benen of the Washington Monthly. Kirk believes that extending unemployment insurance would “just add to the deficit.” In fact, as Benen notes, extending unemployment benefits would be a very efficient way to infuse billions of dollars into the economy. Unemployed people will spend their extended benefits on food, gas, rent, and other necessities. That money doesn’t just disappear into the ether, it feeds local businesses, who in turn keep other Americans working.

The Republican Party line is that the rich need tax cuts because they create jobs. If tax cuts for the rich created jobs, we should already have a full employment economy. As the Bush tax cuts are set to expire, taxes for the rich are at all time lows and unemployment is at historic highs. It is crazy to assume that allowing these tax cuts to continue will magically produce jobs that have yet to materialize, or even bring back the jobs that have disappeared since the Bush tax cuts went into effect.

Ireland’s Billion Dollar Bailout

Over the weekend, the world’s financial institutions agreed to spend $90 billion to bail out Ireland. Tim Fernholz of TAPPED worries that this sum is too small to bring Ireland back from the brink of its sovereign debt crisis. He argues that the world financial community is making the same mistake it made in the 1990s when it forced debtor nations into fiscal austerity without forcing creditor nations to restructure their loans on more sustainable terms.

Once again, bondholders are being spared while Irish taxpayers are being expected to shoulder the heaviest burdens. The economic argument for saving the bondholders is that a bond is an ironclad promise, and that if you start expecting bondholders to accept less than 100% of what was promised to them (no matter how ill-advised they were to take that promise), the entire system will fall apart. It’s ironic that the promises that governments make to their citizens are endlessly renegotiable while bond deals are ironclad. Worldwide, citizens outnumber bondholders. Having citizens lose faith in their government seems far more dangerous than expecting bondholders to take a haircut.

 

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Tags: AlterNet, cat food, Center for Economic Policy and Research, Century Foundation, colorado independent, Demos, Mark Kirk, Medicaid, Medicare, Our Fiscal Security, Senate, Simpson-Bowles, Steve Benen, tax cut, unemployment, working in these times, Deficit Commission, Social Security, Washington Monthly, Deficit Commission, Social Security, Washington Monthly (all tags)

Comments

2 Comments

This follows a pattern

There is a definite pattern to tax burden - it is landing further and more squarely on the shoulders of common people - and shifting away from corporations.

 

To me, this indicates a greater corporate presence in the institutions of Government - and a greater manipulation of laws to allow them to create a landed estate.

 

Ireland, in my view - promised too much. But what you have said is sound - you wrote that its ironic that the promises that governments make to their citizens are endlessly renegotiable - while bond deals are ironclad. 

It's not about faith to me, however, as much as it is a systematic shift to a new form of non-democracy in which corporations become living breathing voting public entities that control government.

And for alot of reasons, I think that one citizen, one vote, one comment and one contribution - are a good way to go for this - it will allow a disperse, grassroots network to be the primary means of election and it will remove the influence of lobbyists.

 

Financial or otherwise.

 

by Trey Rentz 2010-11-30 03:08PM | 1 recs
issues at work...

1)  Baby boomers are retiring.  Baby boomers represent an age where America dominated the world in almost every form of business.  So the best scientists and engineers with 30 years of experience were all Americans.  The new engineers and scientists are more evenly spread out over the world so as these engineers who live in the US retire they are actually being replaced by engineers all over the world.   This will hurt our ability to export products designed here but manufactured somewhere else.

 

2)  Peak oil is approaching.  The US economy actually overspends based on all oil worldwide being sold in US dollars, this creates a demand for dollars because the oil rich nations buy treasuries or other US dollar assets and park their money.  Saudi wealth in America doesn't look any different than American wealth in America if you don't pay dividends.  When this quasi export disappears the US will need to balance 500 billion of export inequality nearly immediately.  

 

3)  The more socialist nations are in worse shape than the US.  We have created a set of expectations regarding how wealthy we are as a nation that is based on a certain level of dominance in business and a level of reproduction demographics that we are not going to maintain long term.  The EU may fall apart because nations like greece think they can have less than 2.2 children, cheat on their taxes and retire at 57 on the governments expense.

 

4)  Obama was an idiot.  National socialized medicine where every living body within the US borders gets a certain level of health care was an idea whose time had come.  If you make it very lean you can get the bulk of the national savings in the form of productive citizens not being killed by cheaply avoidable diseases.  If you make it universal you can mandate the data structure that everyone uses and like HTML did for the internet it will actually save everyone tons of money by making the actual process of record keeping cheaper.  Its not very lean, its not universal, it doesn't have process efficiencies that save money.

 

5)  Cap and trade done Obama style will backfire.  Basically some form of cap and trade is not a bad idea but its like eating, if a nation eats 3,000 calories a day average and is fat what level of calories should we restrict the population to?  If you only import 2300 calories the average for a healthy man that will fix your problem right?  Wrong!  At that level you would have fat rich people and starved to death poor people.  But if you limited it to 2900 you probably wouldn't have anyone starving to death because most people would eat a little less.  With carbon this point of minimal starvation isn't known and its very easy to destroy your economy with the wrong number.  Thats destroy your economy either in relation to business going overseas or even if the world magically all used your number.  Recessions can occur because the products offered are so expensive that people don't choose to trade the amount of work needed to get them, if we make the work suddenly higher in the form of new carbon requirements you risk recession even if the whole world does it.  I much prefer national greening via government just buying green energy.

 

6)  Estate tax is the way to do this.  The estate tax exists to balance out the rich vs poor and stop the super rich from getting super richer.  It doesn't matter where you set this so long as its high enough that the middle never sees it in any magnitude.  This is the unfair tax by design, work hard all your life and we will cheat you by taking half on top of the part we already took but we will cheat  you after you are dead so its not so bad.  I like 4 mill for couples maybe 2 mill for individuals.  This tax isn't for raising money its for keeping society stable.  If the rich are too rich they don't work, we need to give the children of the rich an incentive to be productive members of society.

 

7)  Now that corporations are people with lobbing rights its time for a corporate estate tax.  I suggest 1% asset tax on the smaller company for any merger or un-incorperation activity.  Companies buying out tons of other companies without positive cash flow is how enron made its mess.  This would stop super corporations and made the business market more competitive.  Again this isn't intended to raise revenue this is a behavior modification tax.  Its important that this is a very small number at first.

 

8)  The best way to balance the budget is to grow out of it.  Energy is the way to do that.  If we borrowed 1 trillion and gave it to energy companies for new semi-green power sources at a rate of $6 per watt with the companies giving stock so the government got most of that money back it would create massive growth.  This is something that can be done 100 billion at a time.  We presently know how to make nearly everything we use from garbage if energy is free.  You can turn sewer into oil or plastic with enough energy, you can grow corn in alaska with enough energy etc.

by donkeykong 2010-12-01 12:29PM | 1 recs

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