Yesterday the “Committee for a Responsible Federal Budget” issued a statement chiding the Senate for a bill which opened the door to extending unemployment insurance, because the bill didn’t require that any extension be offset elsewhere in the budget.
Which raises an important question: what, exactly, is a “responsible federal budget”? “Responsibility,” according to the good folks who prepare the Merriam Webster Dictionary, includes “a duty or task that you are required to do” and “something that you should do because it is morally right, legally required, etc.”
The “CRFB” and its “Fix the Debt” project have been called a front for the corporate interests which are behind it, a group which includes hedge fund billionaires, Wall Street CEOs, and defense contractors. Is it morally right to represent these privileged interests in the name of “responsible” budgeting?
If anything, it’s irresponsible to attach preconditions like “pay as you go” to emergency unemployment insurance. But at least there’s a potential silver lining in the CRFB’s position: it gives the group an opportunity to show some real impartiality by asking the special-interest groups it represents to step up to the plate. Trust us: In these boom times for big corporations and high earners, they’d hardly even notice.
The Committee for a Responsible Federal Budget can begin the New Year by restoring its tattered credibility.
Making corporations pay.
The Center for American Progress “War Room” has some ideas for having corporations pay the cost of the unemployment extension. They’ve offset the $6.16 billion cost over ten years by eliminating corporate perks like the corporate-jet deduction, write-offs for the cost of corporate misdeeds, and other deductions for items like “booze” and “golf-course giveaways.”
They’re excellent suggestions. But there’s no reason to stop there. Based on our own calculations and round-up of other estimates, there are other ways to pay for this unemployment extension with money to spare – and to do in only one year, not ten. Here’s how:
Close loopholes in the capital gains tax. Given its funding from hedge fund billionaire Pete Peterson, CRFB may not care for this one. But closing loopholes in the capital gains law would result in an estimated $17.4 billion per year in additional revenue. That’s nearly three times the amount needed for an unemployment extension.
Reduce the budget for overseas military bases. The CRFB won’t like this one either, given its close ties with the defense industry. But we could save an estimated $20 billion per year by reducing the budget for overseas military bases by a modest 20 percent. That would bring in more than three times the amount needed for the extension.
Let the government negotiate with drug companies. Big Pharma gets off pretty easily in CRFB’s proposals, too, but if the government were allowed to negotiate prices with drug companies it would save an average of $22 billion per year. That’s nearly four times as much as needed.
Enact “Defense-friendly” military spending cuts. The CRFB’s defense-contractor sponsors won’t like this either, but we could enact the cuts proposed by a military-friendly think tank – cuts designed by defense experts to minimize the impact on national security. That would save an average of $52 billion per year, which is more than eight times as much as we need.
Tax high earners. Mr. Peterson and the CEOs on CRFB’s board won’t like this, but we could pass Rep. Jan Schakowsky’s “Fairness in Taxation Act” and these very high earners would still pay far less than they would have under Republican Presidents like Eisenhower and Nixon. What’s more, we’d gain an average of more than $82 billion per year in revenue. That’s more than 13 times as much as we need.
Close corporate tax loopholes. According to a Treasury Department study, we could realize an additional $124 billion per year in revenue by closing all corporate tax loopholes. That’s more than twenty times as much as is needed for the unemployment extension.
Impose a financial transactions tax. Given its close association with Wall Street, the CRFB isn’t going to like this one either, but a small tax on every financial transaction would produce an estimated $180 billion in additional government revenue.
That’s nearly 30 times as much as the unemployment extension would cost – and it would also discourage irresponsible and risky mass trading, including some of the risky trading that trashed the economy and put some of these folks out of work in the first place.
Now that’s what I call responsible!
CRFB vs. the Middle Class.
Surprisingly – or not – the CRFB hasn’t signed on to this agenda, at least not yet.
Although the CRFB claims to be “nonpartisan,” its proposals leave corporations alone while targeting the middle class and small business. In fact, virtually all of their suggestions directly or indirectly target the middle class. Changes in housing and student loans would result in higher costs for consumers. Independent businesses would take a hit. Other increased fees would target air travelers and wireless users.
There’s more, but you get the idea. Students and older people are hit especially hard by the CRFB’s suggestions. Corporations? Not so much.
A few questions about responsibility.
It would certainly help its reputation if the CRFB discarded corporate-friendly, anti-middle-class agenda and signed on to meaningful tax reform which asks the prosperous to pay their fair share. Until then, we have a few questions for the Committee:
No preconditions: As a result of Washington’s deficit hysteria, our government has done far too little to help unemployed Americans find work. We’ve failed to maintain our basic infrastructure, which now needs trillions of dollars in repairs. Government jobs have been cut, there’s been too little stimulus spending, and we’ve created a two tiered economy which combines record stock market prices with record levels of long-term unemployment, economic inequality, and lost social mobility.
Since lawmakers’ deficit hysteria has prolonged the misery of unemployed Americans, wouldn’t it be more “responsible” of them – and those who encouraged them – to help them now without preconditions?
“Responsible” Rhetoric: Your latest statement repeats the alarmist rhetoric of past announcements from your organization – saying, for example, that Congress should replace the $6 billion cost and expense on what you call “the already over-extended national credit card.” But the federal deficit has been falling dramatically in recent years – to dramatically, according to many economists, who believe we should be investing in jobs and growth in order to ensure better long-term economic security.
Wouldn’t it be more “responsible” to encourage government investment in jobs and growth today, rather than overhyping the anti-deficit mania which has led our political leaders were spending cuts which have crushed our GDP and prevented many Americans from getting good jobs?
Increasing the deficit: Most economists will tell you that any attempt to offset the cost of unemployment insurance, especially by denying services to those in need or raising taxes on middle-class families, will have an additional contractionary effect on the economy at a time when we should be concerned about additional growth.
The experience of Europe has shown us that these types of contractionary measures don’t just hurt the overall economy. They also wind up increasing government deficits. Since you have made it your organizational mission to reduce the federal deficit, why would are you promoting policies which would have the opposite effect?
Consistency counts: Unemployment insurance extensions under previous administrations, including that of George W. Bush, were not offset in this manner. Such offsets are likely to be more harmful now than they were then. Isn’t it more “responsible” to treat this unemployment extension as we’ve treated others in the past?
We await your response, and are eager to welcome you to the cause of fair taxation from the nation’s corporations and billionaires.