The Ryan Budget Is a Broken Record of Failed Trickle-Down Economics

By Anna Chu and Harry Stein

For the past three years, House Budget Committee Chairman Paul Ryan (R-WI) has been trotting out the same conservative, top-down policies that have failed the nation’s middle- and working-class families, seniors, and the economy. The House Republican budget is built around the tenet that nearly everyone else must sacrifice in order to continue to give billions of dollars in tax breaks to millionaires, big corporations, and Big Oil. At every turn, the House Republican budget reveals its vision of an economy and government that only works for the wealthiest individuals and special corporate interests at the cost of everyone else.

Now for the fourth consecutive year, the House Republican budget proposes dismantling traditional Medicare and slashing investments that drive our economy, all while cutting taxes for the rich and protecting taxpayer subsidies for big businesses and oil companies. The American people have seen this before, and we know how it ends—with millionaires, big corporations, and Big Oil as the only ones who are better off. Everyone else gets left behind, and our economy only gets weaker. Read more.

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We’re Not Broke — We’ve Been Robbed

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

By Richard Kirsch

Richard_Kirsch

With the Friday the 13th 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.

Attack of the Budget Slashers, an OtherWords cartoon by Khalil Bendib

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.

Giving Away the Store

The whole business of giving tax breaks to businesses to lure them to a particular place is largely a scam.

By William A. Collins

William A. Collins

Sure, I’ll move
My business here;
Whisper tax breaks,
In my ear.

There’s a certain political irony surrounding WWE, that unrivaled producer of violence and misogyny for fun and profit. As a significant employer with 700 workers here in otherwise dowdy Connecticut, the outfit formerly known as Worldwide Wrestling Entertainment has already collected $37 million in state tax credits, with more in the pipeline.

This state largesse has added mightily to the company’s profits, nearly $100 million of which funded two losing U.S. Senate campaigns by its former CEO, Linda McMahon. In her failed 2010 and 2012 bids to become a lawmaker, by the way, she claimed to oppose corporate welfare.

Other tycoons are more honest. Throughout our nation, savvy businesses snooker grants, tax credits, exemptions, forgivable loans, free buildings, subsidized training, and other perks from gullible states and cities. Those governments think that without these gifts employers would move elsewhere. Well, sometimes that’s true, but mostly not. The whole business of giving tax breaks to businesses to lure them to a particular place is largely a scam.

The obvious overriding flaw in this bribery system is that if Town A gains a new business from such giveaways, Towns B, C, and D lose out. It’s a zero-sum game. Overall, the company profits while society pays. Recently the Bridgewater hedge fund wheedled a deal from Connecticut’s government to pay it some $100 million to build its new corporate headquarters in Stamford, three towns down the coast from where it is now. Where else was it going to go, Bangladesh?

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No, Bridgewater needs to be near Wall Street. So, OK, maybe it could move to New Jersey or New York. What we plainly need is not this ongoing bribery competition, but an interstate compact or a federal law making it illegal to subsidize employers to settle in a particular town or state. Let them settle wherever they otherwise think is best, using their own money.

Worse still, some of the biggest bribes nationally go to large corporations to relocate from the North to the South so they can replace their unionized workforce with non-union workers. Not only do these factories collect subsidies to move, but they’re also getting taxpayer dollars to make it easier for them to chisel away at their workers’ security.

The cure for this abuse is federal legislation giving workers equal rights to organize anywhere in the country. It would also help if Uncle Sam could prohibit the use of public money to corrupt the process of selecting a site to locate a factory or corporate headquarters.

There’s probably no way to end our basic inter-town and interstate competition for jobs and tax revenue, but it could be made a lot more beneficial. The idea would be to steer this battle for tax base into healthier channels.

Suppose, for example, that cities competed on the basis of the quality of their schools, or the efficiency of their transit, or the beauty of their parks, or the diversity of their housing? Such public services improve the well-being of citizens and employers alike.

As it is, unfortunately, today’s competition is notably less elegant than that. One “family fun center” in Norwalk, my hometown, just received a grant to upgrade its laser tag equipment. Upstate, an entrepreneur recently collected $100,000 in state funding to create new paintball battlefields. Instead of being tarred and feathered, maybe the officials who granted these giveaways should be lasered and paint-balled.

OtherWords columnist William A. Collins is a former state representative and a former mayor of Norwalk, Connecticut.  Distributed by OtherWords.org