Reversing Romney Hood
Last week, President Obama released his proposed budget for FY2014. This budget proposes significant spending cuts, including a controversial proposal to change the cost of living adjustments made to Social Security (known as Chained CPI), as well as additional increases in revenue, in order to reduce the Federal deficit.
While this proposed budget does not go as far as the Congressional Progressive Caucus’s Back to Work Budget in terms of stimulus spending aimed at job creation or revenue increases as a result of ending individual and corporate tax loopholes, it does go much further than does the budget plan produced by Paul Ryan and the House Budget Committee that was passed in the House of Representatives.The Administration includes stimulus spending on infrastructure, to boost job creation, as well as funding for universal preschool programs.
On the tax side, this budget proposal includes instituting the Buffett rule for a minimum tax rate on millionaires, closing tax loopholes that favor the wealthy, oil and gas subsidies and tax credits that benefit companies which shift jobs overseas. Closing these tax loopholes which benefit the wealthy would be used to strengthen tax credits benefitting lower and middle class taxpayers. It would be nice to have a “progressive” tax system where those in higher income brackets actually pay a higher tax rate than those in lower tax brackets. After all, they do benefit the most from living in our society.
While many of the tax code changes, if enacted, would partially reverse the tendency of the tax code to increase inequality of income and wealth accumulation in our society, the main thrust is placed on decreasing the deficit and not on improving the economy by creating more and better jobs. It also seeks to save a significant amount of money by cutting a very successful and popular program – Social Security – which neither contributes to the deficit now nor needs to in the foreseeable future. Simply raising the ceiling for the payroll tax used to fund it or eliminating it altogether would solve Social Security funding far into the future. Cutting the deficit by cutting spending on needed social programs rather than seeing their value and funding them appropriately is not likely to improve the economy or the economic prospects of most people. To the contrary, it would most likely make matters worse.
Congressional Republicans have stated they will go no further in allowing increases in revenues to reduce the deficit than they already did in approving the end of the Bush tax cuts for those earning more than $400k in the deal that ended the so-called “fiscal cliff”. They are basically sticking with the budget plan that Mitt Romney and Paul Ryan lost the 2012 election with. While the Administration’s proposal may seem to be a rational approach to compromising between the more progressive proposals put forth by Democrats in the House and Senate and the GOP proposal that passed in the House, it also opens the door to compromising the future funding and effectiveness of some of the very programs that are most necessary for keeping the most vulnerable among us afloat.
There seems to be very limited discussion in all of these debates in Washington as to how to fund these programs and exactly what they should accomplish. The only thing the GOP seem to want to do is lower taxes on the wealthy, by placing an ever larger burden on the poor, the young and the elderly to meet all of their own needs without government assistance, or at least with much less assistance in the future than is provided now. Doing that while the economy and tax policy makes it increasingly difficult for the vast majority of Americans to keep up with inflation, let alone put significantly more money aside for their personal retirement and health care needs, is a recipe for individual and collective hardship and disaster that could be unprecedented in our history.
Given GOP intransigence on the subject of taxation and spending on social programs that benefit any but the large corporations and the wealthy, it is not easy to be optimistic about the prospects of coming to a Grand Bargain as the president appears to desire to accomplish this year. The fact that even a majority of House Democrats voted against the Progressive Caucus’s Back to Work budget is even more cause for pessimism that much can be accomplished in this Congress with respect to achieving the policies which would strengthen the economy and raise the standard of living of the vast majority of our people. Budget priorities that repeatedly place more emphasis on waging war and building a military complex far more expensive than any other 10 nations combined than meeting the needs of our own citizens add to this frustration.
The obstruction in Congress of just about anything resembling progress in terms of gun safety, tax reform, financial services reform, or even just basic functioning of existing courts and regulatory bodies such as the NLRB and CFPB is appalling. Way too many of our elected officials appear to be working far harder at making sure our government does not function at all than at making it function better. The constant attempts to repeal the Affordable Care Act and attempts by politicians at all levels of government to hinder its effectiveness is a case in point. All they are accomplishing so far is keeping needed health care unavailable to and unaffordable for many of their own constituents.
Who benefits from the Senate refusing to confirm Presidential appointments to the National Labor Relations Board and the Consumer Financial Protection Bureau? Certainly workers or consumers do not benefit as intended by the legislation creating those bodies. More likely the only beneficiaries are those who seek to increase executive salaries and corporate profits by reducing workers’ rights, wages, and working conditions in the case of the NLRB, and those who commit consumer fraud in the case of the CFPB. I know of no Congressional District in this country where such people constitute a majority of the electorate, but that does not dissuade many in Congress from serving their interests first and foremost, apparently in hopes of retaining their jobs after the next election.
Who benefits from continuing and even worsening tax policies and spending procedures which have resulted in the highest level of economic inequality seen here since before the Great Depression and to a higher degree than most other developed nations? How has providing all of these tax incentives, subsidies and deductions for the wealthy improved the economy for average people here or abroad? Changing some of these as the Administration proposes in this budget, such as the one that enabled Mitt Romney to accrue a $100 million IRA that would be impossible for more than a few others to ever accomplish, will help to slow the trend of increased inequality. Ending practices that enable a few to profit enormously by impoverishing workers here by exploiting workers abroad even worse would also help. It’s very hard for anyone to pull themselves up by their bootstraps when they don’t even have boots.
I hope that something positive can come about in this budget debate which will help to improve the economy and the standard of living for so many people here who have seen their prospects dim in the decades since the beginning of the Reagan Revolution. As each year passes without significant progress in this regard, it seems more and more likely that a shakeup in how our government functions is necessary, and that an alternative to the Republicans and Democrats will be needed to help accomplish this. How will all this affect the midterm elections in 2014? I do not know the answer to this, but expect there to be some significant changes. We need significant improvement in all the progressive areas mentioned in the President’s State of the Union speech, including immigrations reform, tax fairness, jobs, minimum wage and gun safety. So far, Congress seems content to extend its inaction for another two years. Does Wall Street still need to be occupied?
Further Suggested Readings: