The Truth About Tax & Spend Conservatism Pt 2

Terrance Heath

Like I said earlier, the truth about "Tax & Spend Conservatism" is that it isn’t about raising or cutting taxes, but about whose taxes are raised and whose taxes are cut. It’s about, as Robert Borsage put it, who gets hit with the tab for the great recession.

…Wall Street excess and conservative deregulation (by law and lassitude) blew up the economy, causing the Great Recession. The bankers were bailed out. Working families took the hit from the downturn — in lost jobs, lost savings, weakened pensions, declining home values, pay and benefit cuts.

The recession blew a large hole in public finances at every level. Tax revenues plummeted. Expenses — from unemployment insurance to food stamps to public health — rose. Public pension funds suffered investment losses. States and localities face severe deficits with a mandate to balance their budgets. At the federal level, the recession doubted the national debt, and drove deficits up to 10% of GDP (much of this the result of plummeting tax receipts).

Now the question is who pays for the damage?

Who Parties & Who Pays

As Bob pointed out in his post, "They want to send the bill to teachers, cops, seniors, kids, the poor and the vulnerable," in the form of slashed wages and pensions. But that’s not all. The teachers, cops, seniors, kids, the poor and the rest of us aren’t through paying.

Who parties and who pays? Tax & spend conservatives have a ready answer, not just in Mississippi and Texas, but in a lot of other states with Republican governors and/or Republican majorities in government. A recent ThinkProgress report says red states that are deep in the red are shifting the burden of budget shortfalls to working- and middle class Americans. Here are just a few examples:

NEW JERSEY: Last year, Gov. Chris Christie’s (R) budget raised taxes on the working poor and middle-class by cutting the state’s Earned Income Tax Credit and homestead rebates — yet still found money for lucrative corporate tax cuts. This year, Christie’s budget calls for $200 million in business tax cuts, while cutting mental health services, $540 million from Medicaid, and withholding property tax rebates for seniors until public workers give up many of their health and pension benefits. Many New Jerseyans have said they prefer a tax on millionaires to Christie’s draconian cuts.

MICHIGAN: Gov. Rick Snyder’s (R) budget would make Michigan’s already regressive tax system even more unfair for the state’s poorest residents. The plan cuts taxes on business by more than 86 percent while slashing $1.2 billion in funding for “schools, universities, local governments and other areas.” Snyder also wants to raise personal taxes by 30 percent — an increase that will fall disproportionately on Michigan’s lowest income residents.

PENNSYLVANIA: Gov. Tom Corbett (R) presented a budget last week that would cut taxes for corporations, while freezing teacher salaries, cutting dental care for Medicaid recipients, and eliminating more than half of the state’s universities. Yet the state has lots of revenue potential in northern Pennsylvania, where out-of-state energy companies’ “fracking” of natural gas has reaped them hundreds of millions of dollars in profits. Corbett has refused to tax these companies, many of which helped fund his gubernatorial campaign, and has instead opted to lay of more than 1,500 state workers.

WISCONSIN: The tax cuts Gov. Scott Walker (R) signed earlier this year worsened his state’s fiscal condition, so now Walker is planning to raise taxes on the poor, eliminate $26 million in tax credits for seniors and single mothers and cancel property tax rebates for low-income Wisconsinites making less than $24,000 a year.

SOUTH CAROLINA: Gov. Nikki Haley (R) has proposed ending the state’s corporate income tax, even while she calls for cutting physical education, K-12 schools, and Medicaid. Haley has received pushback from Republican colleagues: last week the legislature rejected her plan to force state employees to pay more for health insurance.
[Ed. Note: During her campaign Haley also supported bringing back South Carolina's tax on groceries, thus joining Mississippi and Alabama — the only other states that tax groceries.]

KANSAS: Facing a $493 million budget shortfall, Gov. Sam Brownback (R) has called for eliminating the corporate income tax while proposing a $50 million cut to education. With majorities in both Houses, Republicans have proposed a cut to the federal Earned Income Tax Credit that would push 6,500 families below the poverty line.

As the saying goes, "they get you coming and going." In each of these states, GOP governors and legislators use their state’s fiscal crisis to justify painful cuts to education and essential services, as well as overt and covert tax increases like those above. The problem is that in many cases, conservative politics went a long way towards creating the very crises Republican say call for "tough decisions" that invariably wind up being toughest on those having the toughest time.

The bottom line is this: The people who created the crisis — the people who had blast at the party, spilled their wine on the carpet, put their cigarettes out on the sofa, left unspeakable messes to fester and surprise us later, and generally wrecked the place before staggering away to sleep it off somewhere — are not the ones conservatives (and some Democrats Who Should Know Better™) are asking to grab a mop, get out their checkbooks, and take care of this mess.

The question is: Who made this mess? Who created this crisis, and then stuck working- and middle-class Americans with the bill?

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