Category Archives: Deficit

Maybe the best way to fix the deficit is to do nothing.

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While the government and the media debate the pros and cons of President Obama’s and Congressman Ryan’s competing deficit reduction plans, Ezra Klein of the Washington Post suggests another possibility.  Do nothing.

That’s right.  Do nothing to address the deficit and growing national debt!

Using a graph based on the Congressional Budget Office’s September numbers, Klein shows what will happen if Congress fails to act.  Our national budget would begin to balance itself in two years.  And despite the so-called “crises” of Social Security, Medicaid and Medicare, the budget would remain balanced into the forseeable future.

Given the doom and gloom scenarios of the teabaggers and their Republican allies, how is this possible?

It’s the result of allowing the Bush tax cuts to expire at the end of their 2-year extension, implementing the program that changes the way doctor payments are handled in Medicare, and allowing the Affordable Care Act (so-called Obamacare) to be fully implemented.

That’s it!  No privatizing Social Security, no ending Medicaid and no changing Medicare to a voucher system that will likely drive up the cost of health care while dramatically adding to the insurance industry’s bottom line.  All we have to do is keep the politicians from further messing things up!  (Of course, it wouldn’t hurt if we could stop bleeding money and lives in Iraq and Afghanistan.  It’s estimated that those wars have already cost us as much as $3 trillion.  A number that’s increasing by the day.)

Remember this as the debate over the deficit escalates between now and the 2012 election.  The choice is likely to be between a Republican plan of pulling the safety nets out from under our most vulnerable citizens while lining the pockets of the wealthy.  Or enacting President Obama’s plan which will reduce the deficit while continuing to care for the poor, the sick and the elderly.  Or doing nothing and returning to Clinton-era tax rates.Personally, I vote for one of the last two options.  After all, unless my memory fails me, the decade of the 90s was prosperous for most everyone.  Not just the super-wealthy.

A Culture of Blame.

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The recent standoff in Wisconsin raises some unpleasant questions about American society.  Why do we now blame union workers and their pensions for our economic troubles?  Certainly, public employees who make around $50,000/year aren’t getting rich off of taxpayer money.  And why blame foreclosed homeowners for the housing crisis?  Surely they didn’t benefit from purchasing a home for more than its current value and being forced to move.  And how can anyone logically blame the Obama Administration for an economic meltdown that occured before the President took office?

My point is that there is plenty of blame for our problems to go around starting with deregulation, two unfunded wars, unnecessary tax cuts for the wealthy and the greed of Wall Street bankers.  But why focus on blame?  Wouldn’t we all be better served by spending our time trying to find solutions to our current problems instead?

Of course, those who committed illegal acts, if any, should pay for them.  But we should let our legal system address those people.

As for our economy, our deficit can easily be reduced by rescinding tax cuts for the nation’s wealthiest Americans.  We could create high-paying jobs in the U.S. by ending tax incentives for the corporations that send jobs overseas, and by adding tariffs on goods made outside the U.S.  We could generate more revenue by lowering the tax rate on corporations while, at the same time, removing corporate tax loopholes.  We could generate revenue for our state and local governments by ending corporate welfare such as Tax Increment Financing.  We could cut costs by refusing to help the billionaire owners of professional sports franchises pay for palatial new arenas.  We could increase innovation by improving public education and providing small businesses with the same tax advantages as large corporations.

We could save businesses and individuals billions of dollars by creating Medicare for all and hiring enough regulators to eliminate fraudulent claims.  We could save billions by de-criminalizing drugs and ending the so-called “War on Drugs” which has put thousands of non-violent people in prison to learn new skills from hardened criminals.  We could save billions by using our prison system to educate and reform those who would benefit instead of merely warehousing inmates until we’re forced to release them.

We could finally end our dependence on oil by eliminating taxpayer subsidies to big oil companies and spending the same amount of money on alternative sources of energy.  Most important, we could reform our political campaigns by holding political ads to the same truth-in-advertising standards as ads for products and services.  If they don’t tell the truth, the politicians must be removed from office and new elections held as they are in Great Britain.

Of course, you could continue to assume that significant changes like these are impossible.  But if our nation continues to fall behind others in education, health care and innovation, don’t blame me.

The Deficit Scam.

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In a Tea Party-based stupor, Republicans are locked in a battle with President Obama and Senate Democrats over cuts to the sizeable deficit.  Of course, rather than look at the real causes of the deficit, they continue to attack Democratic-supported institutions such as labor unions, Public Broadcasting, the Department of Education, Planned Parenthood, the health care reform bill and the so-called “entitlements” of Social Security, Medicare and Medicaid.  And, of course, they place most of the blame for the deficit on President Obama.Once again, the Republicans are dead wrong.

According to a report by the non-partisan Center on Budget and Policy Priorities, “…the economic downturn, the Bush tax cuts and the wars in Afghanistan and Iraq explain virtually the entire deficit over the next ten years.”

Even the costs of the stimulus bill and financial rescues have had relatively little impact on the deficit.  Again, according to the CBPP, “those costs pale next to other policies enacted since 2001 that have swollen the defict.”  The CBPP report continues, “Just two policies dating from the Bush Administration – tax cuts and the wars in Iraq and Afghanistan – accounted for over $500 billion of the deficit in 2009 and will account for almost $7 trillion in deficits … through 2019, including the associated debt-service costs.”

The truth is that the current Republican initiatives to cut the deficit are a ruse.  They are merely driven by ideology in an attempt to strengthen their hold on public office.  There are only three ways to cut the deficit without harming the middle class and the most vulnerable people in our society:  Cut our bloated defense budget designed, not just to protect us, but to force our will on the rest of the world.  End corporate welfare such as the obscene subsidies for Big Oil.  And raise taxes on those who can most afford it, such as the 400 Americans who control 50 percent of the nation’s wealth.

If you’d like to read the entire CBPP report for yourself, follow this link: http://www.cbpp.org/files/12-16-09bud.pdf

The beginning of the end of Democracy in the U.S.

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Yes, I know that probably sounds alarmist.  But consider the following:

1- The Citizens United ruling by the Supreme Court gave corporations the free speech rights of individuals.  The effect is to make them super-citizens allowing them to inject tens of millions of dollars into our political campaigns with virtually no oversight.  This, of course, greatly benefits the Republican Party which represents the interests of large corporations.

2- Ohio, Wisconsin and other states which are now controlled by Republican governors and Republican-led legislatures have attacked labor unions in order to limit their bargaining rights.  Of course, it’s only coincidence that labor unions are the last remaining large contributors to Democratic Party election campaigns.

3- Republicans at all levels of government are pushing legislation that would de-fund Planned Parenthood, another traditional contributor to Democratic campaigns.

4- Republicans are pushing to de-fund Public Broadcasting which they see as liberal-leaning media that ask too many difficult questions.

5- Finally, many of the states controlled by Republican governors and Republican legislatures are now pushing legislation that would require state-issued IDs in order to vote.  While seemingly innocuous, these IDs would prevent many college students and minorities from voting in their states.  Again, it’s merely coincidence that college students and minorities most often vote for Democratic candidates.The impact of all of this is to greatly increase campaign funds for Republican candidates and to decrease available funding for Democratic candidates.  These tactics would also serve to disenfranchise Democratic-leaning voters and to quiet independent media that refuse to adhere to Republican talking points.

This is a serious threat, folks!  We can’t allow Republicans and their corporate masters to continue to stack the deck against working citizens.  Speak up!  Ask your Republican friends why, if their political ideas are so great, do they have to resort to trickery and bullying tactics in order to push them on ordinary people?

GOP Asks You To Sacrifice On Behalf Of The Wealthy.

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The new crop of Republican deficit hawks are seeking billions of dollars in cuts to education, health care, public broadcasting, environmental protection and pension funds.  “It’s necessary for everyone to sacrifice in order to reduce the deficit,” they say.

Funny that they’re not asking the wealthy or large corporations to do the same.

Indeed, $70 billion of the deficit consists of the Bush era tax cuts for the wealthy.  And large corporations?  In addition to their ever-lower taxes (Cutting taxes on corporations creates jobs, don’t you know?), they enjoy a raft of tax loopholes, tax incentives and outright subsidies.  For example, the world’s most profitable companies (Big Oil) are actually paid to search for oil.  And we provide grants to universities to create new and better pharamceuticals.  Then we allow the large pharamceutical companies to patent the new drugs and sell them to our population at obscene prices.

So when you hear Republicans talk about sacrifices, ask them what sacrifices they’re willing to make.  Are they going to opt out of their government paid health care?  Are they going to cut their salaries?  Are they going to raise taxes on the large corporations that contribute to their political campaigns?

You know the answer.

Self-Inflicted Pain.

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Beginning with the Reagan administration, the U.S. has, in effect, taken out its very large supply of guns, taken careful aim and shot itself in the foot.  Of course, I’m speaking metaphorically, but the damage to our nation is very real.

The Reagan administration’s notion that you could dramatically increase defense spending, increase corporate welfare, demonize unions and cut taxes has had a devastating and lasting impact on our country.  It’s because of Reaganomics that our deficits and national debt began to spiral out of control.  Even Reagan’s own budget director has since labeled Reagan’s economic policies a failure.

Of course, the Repugnants, aka right-wing Republicans, are fond of blaming our deficits on Democrats.  But that’s revisionist history.  Under Reagan and Bush The Elder, the deficits reached new heights.  Clinton and, in fairness, a Republican-led Congress, turned those deficits into surpluses.  Then Bush The Junior turned the entire economy upside down by pursuing two unfunded wars, lowering taxes and deregulating Wall Street.  In order to save us from a world-wide economic collapse, President Obama had to increase spending by providing loans to banks and automakers.  He also, for the first time, included the cost of the wars in Afghanistan and Iraq in his budget.

Republicans have seized on those actions to unfairly blame Obama for the deficits.  Now they want to use the deficits to undo all of the nation’s safety nets for children, the poor, the ill and the elderly.  At the same time, they continue to call for further tax cuts for the wealthy.  (Never mind that our taxes are now the lowest in 60 years.)

There is, of course, an alternative to what Bush The Elder once referred to as “voodoo economics.”  As the economy continues to improve, we could raise taxes back to pre-George W. Bush levels and close the enormous tax loopholes that have been exploited by large corporations.  At the same time, we could reduce the out-of-control defense budget and use a portion of the savings to create jobs by rebuilding our factories and infrastructure.

But if that makes sense to you, don’t hold your breath.  As long as those large corporations and defense contractors are allowed to fund the campaigns of Congressional Representatives and Senators, it’s not likely to happen.

The War Within.

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For many years, Republicans have accused Democrats of “class warfare” and “wealth redistribution.”  They’re correct, of course.  But they fail to mention that they are the ones responsible.  And that the wealth is being redistributed to the wealthiest 2% of our population.

Ever since Ronald Reagan began pushing economic policies based on the “trickle-down theory,” our government has “reformed” (eliminated) welfare for the poor and increased welfare for large corporations and the wealthy.

For example, under Republican leadership, Arizona has reduced corporate taxes 15 years in a row.  As a result, the percentage of state revenue from corporate taxes has dropped 35% to 9%.  Is there really any question why the state is facing a deficit of more than $1 billion in 2011?  Not even increased sales taxes and the already draconian cuts in education, state parks and health care for the poor can make up the deficit.  And Arizona is not alone.

For many years, federal, state and local governments have bowed at the altar of big business thanks to Republicans and their allies.

Due to their political leverage, large corporations are given many advantages over their smaller rivals and individuals.  The federal government has allowed multi-national corporations to avoid taxes by locating a post office box off-shore.  These same corporations have been rewarded for sending jobs off-shore, as well.  State governments provide large “loans” and tax incentives to encourage corporations to open facilities in their states.  And city governments provide Tax Increment Financing (another term for property tax avoidance) to encourage development within their cities.

Corporate farm operations have received $billions in subsidies while family farms have been allowed to go bankrupt.  Large oil companies and mining operations are given subsidies to deface our land and pollute our air and water.

And the best example of all is the recent melt-down and ensuing bailout of our largest financial institutions.  In the ’90s, Republicans stripped away most financial regulations allowing these institutions to gamble with our money.  When the institutions failed, taxpayers were forced to loan them $billions to avoid a devastating depression while the gamblers paid themselves $billions in bonuses.And how did Republicans address the situation?  Why, of course, they fought against any form of increased regulation by Democrats!

Now Republicans are determined to extend the Bush-era tax cuts, despite the fact that they’ll add more than $4 trillion to our national debt over the next 10 years!  They even want to permanently extend tax cuts for millionaires that will add more than $700 billion to our deficit over 10 years.  Out of the other side of their mouths, they continue to talk about reducing our growing deficit.

And how do they propose to reduce the deficit they created?  Do they want to eliminate tax loopholes that encourage large corporations to export jobs and avoid taxes?  Do they want to cut our bloated military budget?  Do they want to go after the abuses of military contractors?

Of course not.

They want to end unemployment benefits, reduce Social Security, reduce Medicare, reduce the Veteran’s Administration, eliminate Medicaid (health care access for the poor) and create a national sales tax which will further increase the tax burden on the poor and the middle class.  They may succeed.

As long as Democrats remain dispirited, and independents vote against their own self-interest as they did this year, Republicans and their corporate masters will continue to extract money from working people.  To ensure that, they can rely on a conservative-controlled Supreme Court that equates corporations to people, and allows corporations to spend tens of millions of dollars on behalf of Republican candidates.

Okay, Republicans, now what?

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You lied, cheated and spent your way into control of the House of Representatives.  You took control of more governors’ offices.  And you took control of 19 more state legislatures.

Much of your success was the result of massive corporate donations and your filibustering of legislation that could have helped turn this economy around – the economy that collapsed on your watch due to your lack of oversight and regulation.  Remember?

You blamed your mess on President Obama, Nancy Pelosi and Harry Reid.  Then you talked about “taking your country back,” resorting to 2nd Amendment remedies, if necessary.

You won on promises of less government and lower taxes.  So what next?

Plan to cut the size of government?  Maybe you haven’t noticed, but the downsizing of state, county and local governments is one of the primary reasons our economy is so slow to recover.  We’re losing government jobs faster than private industry can add jobs.  Moreover, the lack of government oversight of Wall Street is one of the main reasons we’re in this predicament.

Plan to cut taxes by renewing the ill-conceived Bush tax cuts for the wealthy?  Then plan on adding $80 billion to our deficit over the next two years.  Want to repeal “Obamacare?”  Then plan on adding yet another $138 billion to our deficit over the next 10 years.  (Not to mention the fact that you’ll be denying health care access to more than 30 million Americans.)

Plan on cutting the deficit?  You could cut half of our bloated $663.7 billion defense budget (not including the Iraq and Afghan wars).  But what will you do about the defense contractor jobs you eliminate?

The most radical Republicans talk about eliminating or privatizing all “entitlements” such as Social Security, Medicare and Medicaid.  They want to get rid of the Department of Education, the Environmental Protection Agency, and the National Science Foundation, as well.  All of that combined would save $1.48 trillion a year, completely offsetting the deficit and leaving us with a surplus of more than $200 billion each year (not including tax cuts for the wealthy, rising health care costs, increased military spending and increased border security).

But we’d have a nation of uneducated, unheathy children and heavily-armed, destitute senior citizens.  Try running on that platform in future elections.  Or will you do as some Tea Party candidates suggest, and limit voting to landowners or those already in office?

Tax Cuts As An Economic Stimulus.

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It’s one of the most important issues that will be debated in the coming months. Democrats, including President Obama, want to let the Bush tax cuts for the wealthiest two percent of our population expire. They claim that we can no longer afford these tax cuts and letting them expire would reduce the deficit and create more fairness for the middle class.

Republicans, on the other hand, claim that the majority of those making $250,000 or more per year are small business owners and that raising their taxes would cost us thousands of jobs. Indeed, they would not only make the Bush tax cuts permanent. They would cut taxes even further as a stimulus for creating jobs.

There are a couple of things I find troubling with the Republican logic. Most small business owners make far less than $250,000 per year. And those who make more than $250,000 likely won’t spend the extra money on their businesses. As a small business owner, I know that’s just not how things work. While some will put the extra money back into their business, most will invest the money in securities, save it or spend it on themselves.

But don’t just take my word for it. Let’s look at how most economists view tax cuts as a form of stimulus: They estimate that tax cuts have a return of 32 cents of economic growth for every dollar spent. On the other hand, programs like food stamps (which many Republicans oppose) have much higher rates of return. It’s estimated that such programs generate $1.71 of economic growth for every dollar spent. And, according to Mark Zandi, John McCain’s economic adviser during the 2008 presidential campaign, those unemployment benefits that Republican teabaggers so oppose are estimated to generate $1.61 in economic growth for each dollar spent.

As the nonpartisan Tax Policy Center put it: ” The tax cuts of 2001 and 2003 provided much less stimulus to the economy than other policies of equal cost would have. The underlying reason is that although the tax cuts were well-timed to provide a short-run economic stimulus, they were poorly designed for this task.”

They did, however, provide a nice windfall for the wealthiest Americans while adding billions to our deficit.

Who Are We Afraid Of? (Part II)

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It was recently announced that the U.S. military budget ($692 billion for FY 2010) now exceeds military spending by all other nations combined. That’s right. We now spend more on defense than all 194 of the other countries in the world! And that doesn’t even include the money we spend on Homeland Security, or most of the money we spend on intelligence gathering. (A recent expose’ by the Washington Post reported an estimated 854,000 people work in the secretive information gathering business in the U.S. No one knows how much money is being spent on the endeavor.)

There can be only two conclusions from that data: We are the most powerful nation in the world. And we are the most paranoid; maybe with good reason.

According to Wikipedia, “as of March 31, 2008, U.S. armed forces were stationed at more than 820 installations in at least 135 countries.” Of course, we have large numbers in the war zones of Afghanistan and Iraq. But we still have 52,440 in Germany, 9,660 in Italy and 35,688 in Japan more than 60 years after WWII. We have 28,500 in the Republic of Korea more than 50 years after the Korean Conflict. We have 9,015 in the United Kingdom (are we expecting a repeat of our Revolutionary War?), 47,236 in East Asia, 3,362 in North Africa … the list goes on.

Given the state of our economy, what could possibly justify the expenditures? If they’re not needed, we’re wasting an incredible amount of money. And if they are, we need to change our foreign policy, because we must be the most hated people on Earth.