We’re Not Broke — We’ve Been Robbed

Slashing government spending now is just going to make our nation poorer.

By Richard Kirsch

With the Friday the 13^th December deadline for a federal budget deal, the cries of “we’re broke,” and “we can’t afford to keep spending,” are ringing again. But we’re not broke and acting like we are is making us poorer.

One of the biggest common misunderstandings is that governments are like households, which need to tighten their spending when times are tough. Actually, governments and households work in opposite ways.

Governments can and should spend more when times are tough. Government spending makes up for lack of spending by families and businesses, and it helps get the economy moving by getting people back to work, putting money in their pockets, and contracting with businesses.

If we needed a reminder of that, the recent government shutdown gave us one. Journalists reported story after story about how business was down, as federal workers were laid off and national parks closed. The estimates are that even though the shut down only lasted 16 days, it cost the economy $24 billion.

We need government spending and investment to get the entire economy moving forward. When families are back at work with decent wages, government tax revenues will rise and spending on social supports will fall. That’s when government can reduce spending without slowing down the economy.

During the past two years we’ve reduced the deficit by half, close to 2008 levels. That may sound like it’s a good thing, but it’s really the biggest reason the economy is so lackluster for the vast majority of Americans with a near-record-high in unemployment, stagnant wages, and a smaller proportion of Americans working than any time in the past 30 years.

We’ve also cut all the wrong things: spending that puts money in people’s pockets today and investments in our economic future. We’ve cut spending on education, unemployment insurance, environmental protection, and scientific research. Our public investment, which includes annual government programs and spending on roads, bridges, transit, research, and development is actually the lowest it’s been as a share of the economy in 60 years.

What if we’d taken a different course during the recession? How about rather than cutting spending after an initial stimulus, which avoided a second great depression by saving three million jobs, the government had kept at it?

History shows that if we have continued the levels of spending normally done after recessions, we would have spent some $800 billion more than we did, and the overall economy (and not just the stock market) would be back to the same level today that it was before the recession hit.

In short, the argument that the government must live within its means to protect our children’s future is backwards. Averting deficit spending now means starving our children’s present and their future. More parents will have to struggle to get by, fewer good jobs will be created, education will suffer, and today’s college students will stumble into their careers saddled with huge debt loads.

And our infrastructure will keep crumbling and research will dwindle, making it harder for our businesses to compete in the global marketplace.

There are ways we can reduce the deficit without slowing down the economy very much, if at all. That is by looking at the other truth about the cry that “we’re broke.” In fact, we have been robbed.

When Uncle Sam gives big corporations tax breaks to move jobs overseas, we’ve been robbed. When Washington taxes billionaires at a lower rate than their secretaries, we’ve been robbed.

To get the country moving again, Congress needs to reverse direction and increase spending on vital services and investment.

That means reversing the budget cuts on domestic spending already in place and stopping any more sequestration cuts on vital services for our families. And raising taxes on the wealthy and huge corporations, which have been gaming the system at our expense.

Instead of obsessing about the “need” to cut government spending, our leaders should be figuring out how best to stimulate the economy to provide both a better today and future for our children.

---

Richard Kirsch is a senior fellow at the Roosevelt Institute and the author of Fighting for Our Health: The Epic Battle to Make Health Care a Right in the United States. He’s also a senior adviser to USAction. USAction.org.  Distributed via OtherWords. OtherWords.org.  Cartoon Credit:  Attack of the Budget Slashers, an OtherWords cartoon by Khalil Bendib.

What ‘Grand Bargainers’ Simpson and Bowles Really Stand For

By Bernie Sanders | November 28, 2012 | Originally Published on Campaign for America’s Future Blog

There has been a lot of discussion about Congress enacting a “grand bargain” during the lame duck session of Congress.  Many members of Congress have talked about using the plan put forward by Alan Simpson and Erskine Bowles as an outline for a “balanced” approach to deficit reduction.

Let me take this opportunity to tell you a little about Alan Simpson and Erskine Bowles and what their plan would do.

As many of you know, Alan Simpson is a former conservative Republican Senator from Wyoming who has wanted to cut Social Security benefits for decades.

Here are just a few of the rude, inaccurate, and derogatory statements that Alan Simpson has made about Social Security:

• On August 24, 2010, Alan Simpson wrote in an e-mail to the head of the Older Women’s League: “And yes, I’ve made some plenty smart cracks about people on Social Security who milk it to the last degree. You know ‘em too. It’s the same with any system in America. We’ve reached a point now where it’s like a milk cow with 310 million tits!  Call when you get honest work!”

• On Friday, May 6, 2011, Alan Simpson told the Investment Company Institute, that Social Security is a “Ponzi scheme”, “not a retirement program.”  Simpson went on to say that Social Security “was never intended as a retirement program. It was set up in ‘37 and ‘38 to take care of people who were in distress — ditch diggers, wage earners — it was to give them 43 percent of the replacement rate of their wages. The [life expectancy] was 63. That’s why they set retirement age at 65.”

• On June 19, 2010, Alan Simpson said: “Social Security was never a retirement. It was set up to take care of poor guys in the depression who lost their butts who were getting butchered.”

Erskine Bowles has been a board member of Morgan Stanley since 2005 and made a fortune as a Wall Street investment banker as many of you know.

However, you may not know that Erskine Bowles made the following statement in 2011 at the University of North Carolina: “Paul Ryan is honest, he is straightforward, he is sincere. And the budget that he came forward with is just like Paul Ryan. It is a sensible, straightforward, honest, serious budget and it cut the budget deficit just like we did, by $4 trillion.”

You may also be unaware that Erskine Bowles and Alan Simpson endorsed Congressman Charles Bass (R-NH) against progressive Democrat Ann McClane Kuster.

In their endorsement of Rep. Bass, Bowles and Simpson wrote: “Charlie supported a plan that demonstrated it is possible to raise revenues for deficit reduction through pro-growth tax reforms that reduce tax rates for individuals and businesses.  Likewise, it is possible to reform entitlement programs … He is a brave leader who deserves the thanks of everyone who really cares about our nation’s future.”

Rep. Bass voted for the Paul Ryan budget that every Democrat in the Senate has voted against.  In contrast, Kuster, who went on to defeat Rep. Bass, has said: “Let me be clear: I will never cut Social Security and Medicare benefits. My Tea Party opponent will.”

Even more distressing, in my opinion, is the belief that the Simpson-Bowles plan is a “balanced approach” to deficit reduction that we should be using as a model.

Here are the major elements of the Simpson-Bowles plan that I believe the Democratic Caucus should strongly oppose:

1. Cutting Social Security benefits for current retirees.  The Simpson-Bowles plan would reduce Social Security benefits for current retirees by using a “chained-CPI” to determine cost-of-living-adjustments (COLAs).  According to the Social Security Administration, enacting a chained CPI would cut Social Security benefits by $112 billion over 10 years meaning that the average Social Security recipient who retires at age 65 would get $560 less a year at age 75 and would get $1,000 less a year at age 85 than under current law.

   Two-thirds of senior citizens rely on Social Security for more than half of their income, and the average Social Security benefit today is about $1,200 a month.  At a time when seniors haven’t received a Social Security COLA in two out of the last three years as the price of prescription drugs and healthcare have gone up, the Simpson-Bowles plan would make it harder for today’s average senior citizen to make ends meet.

2. Cutting veterans’ benefits.   Not only would enacting a chained-CPI be harmful to senior citizens, it would also make substantial cuts to the VA benefits of more than 3 million veterans.  The largest cuts in benefits would impact young, permanently disabled veterans who were seriously wounded in combat.  According to the Social Security Administration, permanently disabled veterans who started receiving VA disability benefits at age 30 would see their benefits cut by more than $1,300 a year at age 45; $1,800 a year at age 55; and $2,260 a year at age 65.  That would be simply unacceptable.
3. Raising the retirement age to 69 years.  Increasing the retirement age to 69 would reduce lifetime Social Security benefits for workers by about 13 percent.  This would be particularly harmful to construction workers, nurses, factory workers and other labor intensive jobs.  According to the Center for Economic Policy and Research, 45 percent of workers who are 58 years of age and older work in physically demanding jobs or jobs with difficult working conditions.  Moreover, older Americans have a higher rate of long-term unemployment than any other age group.
4. Cutting Social Security benefits for middle class workers.  According to the Social Security Administration, all of the Social Security policy changes in Bowles-Simpson would cut average annual Social Security benefits for middle-income workers (with average annual lifetime earnings of between $43,000 and $69,000) by up to 35 percent.
5. Reducing tax rates for the wealthy and large corporations.  The Simpson-Bowles plan would significantly reduce income tax rates for the wealthiest Americans and largest corporations to between 23 and 29 percent — even lower than the top rate of 35% under the Bush tax cuts.    Simpson and Bowles claim that some $1.2 trillion in revenue would be increased under their proposal by eliminating or reducing tax expenditures, such as the mortgage interest deduction, and the tax exclusion on employer health insurance and pension plans.  However, a March 22, 2012 Congressional Research Service report has suggested that federal income tax rates could be reduced by no more than two percentage points under a realistic scenario of reducing tax expenditures in order to be deficit neutral, and could not reduce the deficit.

   The President and almost all Democrats have supported repealing the Bush tax breaks for the top two percent.  That means that the top individual income tax rate would be increased from 35 percent to 39.6 percent – the same level under President Clinton when over 22 million new jobs were created.  We should eliminate corporate tax loopholes and tax breaks for the wealthy — and use this revenue to reduce the deficit and create jobs, not to lower tax rates.

Other harmful provisions in the Simpson-Bowles plan include:

• Increasing the regressive gas tax by 15 cents starting next year;

• Increasing premiums for Medicare, Medicaid, and the Children’s Health Insurance Program;

• Increasing interest rates on student loans;

• Increasing co-payments for middle class veterans receiving health care through the VA;

• Cutting 450,000 jobs in the federal workforce and private companies under contract with the federal government;

• Eliminating or limiting the exclusion of taxation on employer provided health insurance and pensions;

• Encouraging companies to ship jobs to China and other low wage countries by adopting a “territorial” tax system allowing corporations to evade U.S. income taxes by establishing subsidiaries overseas;

• Increasing taxes on low-income workers making between $10,000 to $20,000 a year by 14.5% in 2021 by moving to a chained-CPI; and

• Reducing the number of Americans eligible for Medicaid, SSI, the Children’s Health Insurance Program, WIC, Head Start, LIHEAP, the Earned Income Tax Credit, the Refundable Child Credit, and the Savers’ credit by shifting to a chained-CPI.

Those are the major elements of the Simpson-Bowles plan.  If enacted, they will cause major economic pain to virtually every American, while lowering tax rates for millionaires, billionaires and large corporations even more than President Bush.

For all of these reasons, I hope you will join me in opposing the Simpson-Bowles approach to deficit reduction.

---

Bernie Sanders is an independent U.S. senator from Vermont. This was written as a “Dear Colleague” letter to members of the U.S. Senate and was published on the Campaign for America’s Future Blog

Ryan-Romney Budget Gives Away the Store

Congressman Paul Ryan has finally endorsed Mitt Romney as his preferred candidate for president.   Yeah, like we didn’t expect that coming.  Thus, it should be no surprise that both Romney and Ryan support the same key budget tenets — massive cuts to programs critical to its economic security of middle class Americans, and ending Medicare for our nation’s seniors as we’ve known it and paid into throughout our working careers — all so they can transform our nation’s wealth into outrageous tax cuts for millionaires and billionaires.

There budget plans would

• Turn Medicare into a voucher program to help pay for massive tax cuts to the wealthiest.
• Turn Medicaid into a block grant program that can easily be underfunded or diverted by states for other purposes.
• Protect tax loopholes that benefit oil companies and hedge fund managers.
• Repeal Health Care Reform, re-opening the do-nut hole, re-instituting pre-existing conditions and increasing health care costs to every American by thousands of dollars for not just medical premiums and services but in increased taxes as well.
• Make arbitrary cuts to programs essential to middle-class families like education, environment and clean energy.
• Provide large new tax cuts for millionaires and billionaires, above and beyond any permanent extension of the Bush tax cuts
• Not balance the budget and in fact, would increase our national debt.

But beyond the deep cuts in programs, those cuts mean some serious job losses in the public sector.  That means the Republicans intend to dump more Americans into the unemployment roles and simultaneously slash the safety net that would have assisted them.

Romney has said he is on the same page as Ryan – even “applauding” Ryan’s budget – so America’s seniors and the middle class need to take note of what this budget means to and for them.  Here’s a press release from the Obama/Biden Campaign that compares the two GOP budgets.  Is that where you think American should be going?  Do those represent your priorities for America?  If not, then get of your duff and get out there and fight for our ticket!

FOR IMMEDIATE RELEASE

Obama/Biden Campaign

THE RYAN-ROMNEY BUDGET PROMOTES GIVEAWAYS TO OIL COMPANIES, WALL STREET,
AND THE WEALTHIEST WHILE SENIORS AND THE MIDDLE CLASS FOOT THE BILL

“Governor Romney has said he is on the same page as Congressman Ryan, so America’s seniors and the middle class should take note of what that means for them. The Romney and Ryan budgets would turn Medicare into a voucher program, increase health care costs to seniors by thousands of dollars and make arbitrary cuts to programs essential to middle class families like education and clean energy, all while giving massive tax cuts to the wealthiest and protecting taxpayer subsidies to oil companies and hedge fund managers. And by repealing health care reform and cutting over $1 trillion from Medicaid, Governor Romney and Congressman Ryan would deny coverage to approximately 50 million Americans who currently have it, including low-income children, pregnant women, nursing home patients and people with disabilities. We can’t do the same thing and expect a different result – Governor Romney has embraced a carbon copy of the policies that led to the economic crisis.” — Ben LaBolt, Press Secretary

ROMNEY-RYAN BUDGET: TAX CUTS FOR THE TOP, DEEP CUTS FOR THE MIDDLE-CLASS

The budget released today by Rep. Paul Ryan mirrors the radical policies supported by Gov. Mitt Romney: massive tax breaks for millionaires and billionaires, privatize Medicare and deep, arbitrary cuts that hurt middle-class families.

	Ryan’s Path to Poverty	Romney Budget Plan
Mutual Admiration	“Look at what he put out! This is a great development. … This tracks perfectly with the House budget.” — Ryan on Romney’s budget,  Washington Post, 11/4/11	“When Paul Ryan put his plan out in the first place, I said it was a major advance, a big step forward, we were on the same page.”  — Romney on Ryan’s Medicare plan New York Times, 2/1/12
Privatizes Medicare	YES. Turns Medicare into a voucher program that shifts costs to seniors.	YES. Similar voucher plans make seniors pay $6,350 more a year. Charges seniors more for prescription drugs and preventive care. Increases payments to insurance companies by $100 billion and repeals other reforms, accelerating the exhaustion of the Medicare trust fund to 2016.
Breaks Bipartisan Deal on Spending	YES. Deep cuts to domestic spending would break the bipartisan agreement. Cuts would cost jobs and hurt average Americans, slashing investments in education, clean energy and scientific and medical research.	YES. Proposes similarly deep cuts to discretionary spending that would also break the bipartisan deal. Holding true to his promise to balance the budget would require deeper cuts to all domestic spending than the House plan.
Huge Tax Cuts for the Wealthy	YES. Extends all of the Bush tax cuts. Provides trillions more in tax rate cuts weighted towards the rich without specifying how to pay for them.	YES. Extends all of the Bush tax cuts. Provides $5 trillion in tax cuts weighted towards the wealthy without specifying how to pay for them.
Deep Cuts in Medicaid and Healthcare Coverage	YES. Repeals health reform and cuts over $1 trillion from Medicaid over the decade. Deny coverage to up to 60 million people, including low-income children, pregnant women, nursing home patients, and people with disabilities.	YES. Repeals health reform and cuts over $1 trillion from Medicaid over the decade. Deny coverage to up to 53 million people, including low-income children, pregnant women, nursing home patients, and people with disabilities.
Repeals Key Protections in Wall Street Reform	YES. Rolls back key protections in Wall Street Reform designed to prevent future financial crises and end the era of “too big to fail.”	YES. Repeals all of Wall Street Reform,  even though it creates no budget  savings.

---

End note:  Absent from the Obama/Biden press release above was the restoration of the sequestration cuts that were made to military spending which takes up, by far, the largest portion of spending in the federal budget.  It is time to put our money “where our mouth is” and stop putting money into more and more weapons of destruction and involving our Country in one armed conflict after another.  Maybe we should mandate that every Republican is required to watch that new “Bully” film.

Heller’s Out-of-Touch Agenda Would Hurt Nevada

This morning, Rep. Shelley Berkley held a conference call with Seniors across Nevada to highlight how Sen. Heller intends to vote this week to END Medicare for the second time (he already voted to end it while a member of the House).  Here’s the press release issued after that call:

# # #

Las Vegas, NV – In anticipation of this week’s vote on the reckless Republican budget proposal in the Senate, Rep. Shelley Berkley held a conference call with seniors from across Nevada to discuss a new state-specific report detailing how appointed Senator Dean Heller’s plan to end Medicare will harm Nevada seniors.

Heller voted for the budget plan as a member of the House of Representatives and said he would be “proud” to vote for it again as an appointed member of the Senate.

“This week, the U.S. Senate will vote on Dean Heller’s reckless plan to end Medicare so he can pay for billions more in wasteful tax subsidies to Big Oil,” Berkley said.

“Dean Heller has said he is proud to be the only member of Congress to vote for this irresponsible plan twice.  With these votes, Dean Heller is making perfectly clear to Nevada seniors where his priorities are, and that is ending their Medicare so he can give billions more in tax giveaways to the Big Oil companies that fund his campaign.”

Berkley went on to highlight the clear choice Nevada faces in next year’s election.  “I am fighting to protect Nevada seniors from Dean Heller and Washington Republicans’ assault on their healthcare, while Dean Heller wants to end Medicare as we know it.”

Scott Watts from Carson City joined Berkley on the call, saying “it’s time for Dean Heller to come clean about his plan to end Medicare.  Nevada seniors cannot afford Dean Heller in the United States Senate.  He is not looking out for our interests.”

Carl Martinez from Las Vegas said the Heller/GOP budget “is going to be a disaster for our Medicare recipients and Congresswoman Berkley has been one of the strongest opponents,” of Heller’s plan to end Medicare as we know it.

Barbara Stone from Reno shared her story of how Medicare saved her life.  “Without Medicare, I wouldn’t be here, and what Dean Heller wants to do is absolutely ludicrious, we cannot survive on a voucher system.”

To view the report with Nevada specific numbers on how the Heller/GOP budget would detrimentally impact Nevada seniors, view here:

http://democrats.senate.gov/gop-budget/pdf/gop-budget-nv.pdf

###