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A Progressive Deficit Fix?

A Progressive Deficit Fix?

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.

 

This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. 

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Photo credit: Breakmould
by Lindsay Beyerstein, Media Consortium blogger

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31 comments

+ add your own
9:23PM PST on Dec 3, 2010

"I can no longer even read the idiotic articles about the government's plan to fix the budget or the deficit"

The best answer is for them to spend less. Until that happens it would be best if we beat down the doors of our representatives to get them to support the FairTax.

This would prevent them from hiding tax increases among the competing groups that pay them!

2:41PM PST on Dec 3, 2010

I can no longer even read the idiotic articles about the government's plan to fix the budget or the deficit...we have the same people giving themselves the same tax breaks...and they will cut valuable social programs but every single whore in congress will continue getting rich from their actions...yes.. doing this the way they are doing it is what they have always done...and it's plain wrong...lying, cheating, and greed are the call of the day for our elected officials...just how many poor elected officials have you ever met??? the answer would be none...

11:19AM PST on Dec 3, 2010

"Ugh, tax breaks to the rich DO NOT WORK. I cannot stand it when people think they are a solution to poverty or unemployment. If I am a CEO of a company, and I get more money to invest in my business, who is going to benefit from that? Me, or the people who work for me for eight bucks an hour? God knows I'm not going to give them all pay raises, I'm just going to do things that result in me getting more money. "

I think your opening premise is a lie!
You say you do for yourself? If the business grows you will not hire to cover the new business?
BTW CEO's are not always the owners! So I wonder about that as well!

10:27AM PST on Dec 3, 2010

"We need to spend money on what's needed: social services, infrastructure, parks and wildlife, and sponsor this with taxing wealthy individuals and corporations to the degree the rest of us are taxed. "

Rie Rie, you are not going to like this question. But you brought the subject up. In order to even discuss the question of "taxing wealthy individuals and corporations to the degree the rest of us are taxed.", we would first need to know what you are taxed. Lacking that will the FACT that the top 5% pay more in tax then the remaining 95% together pay in taxes show you anything?
There are 13,000 people with total wages of $75 billion, yet they pay taxes on $384 billion. So then either we charge you taxes on a sum 5 times greater than your wages or charge them on the percentage of your income you do pay taxes against.
I am going to have to do the research on corporate taxes very soon.

I also need to know what you mean by social services? Much of the nations infrastructure is the responsibility of the states. Are you suggesting that the Feds take it all over?

4:16PM PST on Dec 2, 2010

Republicans and democrats are the american league and the national league.

The elections are the all star game and the world series.

Everyone pays admission.

And yer OUT !!!

Regards...

3:26PM PST on Dec 2, 2010

Ugh, tax breaks to the rich DO NOT WORK. I cannot stand it when people think they are a solution to poverty or unemployment. If I am a CEO of a company, and I get more money to invest in my business, who is going to benefit from that? Me, or the people who work for me for eight bucks an hour? God knows I'm not going to give them all pay raises, I'm just going to do things that result in me getting more money.

12:41PM PST on Dec 2, 2010

John Williams and Michael W.
You are ***so***right.

And, Ross L.,
If you were president, we'd be doing a whole lot better. "I owe my sould to the company store" indeed as the ol song says.

We need to spend money on what's needed: social services, infrastructure, parks and wildlife, and sponsor this with taxing wealthy individuals and corporations to the degree the rest of us are taxed.

11:16AM PST on Dec 2, 2010

"Her plan is the best yet!"

You think more taxes on everything is a great plan?? Perhaps you should look a little deeper!

10:34AM PST on Dec 2, 2010

Say we accept that those receiving largesse from the Govenment spend everything. Does it really grow the economy? The monies they are given came from somewhere. It is taken FROM the economy, sent to DC, and from there a lesser amount is given to others in the fconomy. Less is created in the first place as the money is taken out of the economy. When it comes back it is less and produces nothing. The food already exists, the housing already exists, as all of the other things that those living on the welfare of the Government use.

10:11AM PST on Dec 2, 2010

"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."

Someone is lying to you! The only proposal on the table is a tax increase!!

If you don't think the previous tax cuts did not improve things just look at the Clinton tax revenues vs those of Bush. Revenues under bush exceeded those of Clinton by $1.8 trillion. In terms of the median income that is 70,548,095.70 jobs, Using the mean income it's 47,438,280.03. So no matter how you look at it we are talking millions of jobs. Do you really want an additional number of jobs in the millions to go away?

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Kristina Chew Kristina Chew teaches ancient Greek, Latin and Classics at Saint Peter's University in New Jersey.... more
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