Curbing the Deficit, Cat Food, and You
The deficit commission released its much anticipated list of helpful money-saving tips for the federal government last week. These tips include tax cuts for the rich, reducing unnecessary printing costs, and cutting the jobs of federal contractors.
The recommendations are more like a menu than a program. As Mark Schmitt of The American Prospect notes, there’s no coherent vision, just a list of possible tax increases and program cuts with projected savings attached.
The commission was dubbed the Cat Food Commission by critics who see the project as an attempt by the Obama administration to provide political cover to gut Social Security, thereby forcing the elderly to subsist on cat food.
Officially, the commission is charged with making suggestions to balance the budget by 2015. Kevin Drum of Mother Jones is surprised at the hype the presentation has attracted, considering that it’s not a piece of legislation, or even proposed legislation, or even the actual report by the deficit commission, but rather a draft presentation by “two guys in a room” (co-chairs former Sen. Alan Simpson (R-WY) and Erskine Bowles).
Hope is not a plan
Drum has trouble taking the draft seriously because its main focus is cutting discretionary spending, which according to the Congressional Budget Office, only accounts for about 10% of our projected deficit. The secondary focus of the report is Social Security, which only accounts for a small share of the projected deficit, and moreover, is easily fixable with very small tax increases and tiny decreases in benefits phased in over a long period of time.
Rising health care costs account for the lion’s share of our projected deficit, but as Drum notes, the draft doesn’t get into detail about how to contain those costs, the authors simply stress that someone had better get on that. No kidding. The authors assert that the government should never take in more than 21% of GDP in total taxes. Drum dismisses this suggestion as completely unrealistic seeing as the authors have no plan to slow the growth of health care costs.
Note to workers: “Drop dead”
Roger Bybee of Working In These Times takes aim at the presentation’s suggestion to cut taxes on the rich. The deficit chairmen urge legislators to cut the top tax rate from 35% to 23%, which as Bybee notes, would actually add to the deficit. The presentation also favors cutting corporate taxes and taxes on American expatriates. Hardly deficit-friendly stuff. Bybee argues that the real goal of this commission is to deflate public expectations about the role of government:
This draft report was thus not about slicing the deficit, but shrinking those portions of the government on which the poor and working class depend and shoveling new benefits to corporations and wealthy, at a time when the richest 1% already rakes in 23.5% of all U.S. income.
According to AFL-CIO head Richard Trumka, whom Bybee quotes, the message to the American worker is: “Drop dead.”
Gawker vs. the Cat Food Commission
Astute commenters at the media gossip blog Gawker discovered, via a New York Times interactive feature, that the entire problem could be solved by rolling back the Bush tax cuts and ending foreign wars. John Tomasic of the Colorado Independent explains how they did it:
The Gawkers simply let the non-job-making Bush tax cuts expire (because they were never meant to be permanent and because most Americans don’t want them extended) and they ended Bush’s (now Obama’s) overseas military adventures, which cost more money every week ($2 billion!) than the Rolling Stones have made in the last forty years, our contemporary version of the Cold War space race taking place not in space but in Afghanistan and Iraq, where the United States is racing only against itself to borrow and spend as much money as possible every single day– almost none of that money spent on the troops who come home wounded and sad and totally screwed up.
Nine out of ten grandmas prefer the fiscal policies of the Clinton administration to Meow Mix.
Extending unemployment = Jobs
Ed Brayton of the Michigan Messenger argues that extending long term unemployment insurance benefits would benefit the economy to the tune of half a million jobs. The unemployed still have to eat. Their children still need shoes. If unemployment benefits are extended, the unemployed will spend their benefits quickly in order to live, which is exactly what an economic stimulus is designed to do. Grocery stores and shoe stores employ people. Checkers and shoe salesmen also spend their wages in their communities, thereby sustaining the jobs of still more people.
Pension plan bets green on green
Investing in green jobs is sound economic policy, but governments can’t do it alone. The private sector has to help finance the greening of our economy, too. One California pension plan is stepping up and betting big, investing $500 million on green projects, according to Mikhail Zinshteyn of Campus Progress. The California Public Employees’ Retirement System (CalPERS) has a green portfolio worth $2.5 billion, which it has amassed since 2006. CalPERS is betting that low carbon energy programs and other clean energy initiatives will be a lucrative place to park their members’ money.
Hopefully, these investments will also benefit the economy in the short term by creating jobs, including jobs for some California public employees. However, some analysts are skeptical that these investments will yield the handsome dividends that CalPERS analysts are projecting.