Fact Sheets & Briefs

Celinda Lake: Effective Messaging On The Sequester

Isaiah J. Poole — Thu, 28 Feb 2013 18:03:21 -0500

Celinda Lake: Effective Messaging On the Sequester from Isaiah J. Poole

Progressives have seen major wins with the public on taxes. Voters still believe the wealthiest 2 percent and big corporations are not paying enough in taxes. But we have seen losses in the budget debates with increased salience around deficits and support for across the board cuts.

Voters still believe the budget can be balanced by cutting waste, fraud, and abuse. We are paying a price for the lack of a comprehensive progressive economic narrative.

When we have candidates that do implement progressive economic policies, they do not talk about them enough. This vacuum of information is filled by Republican talking points on “big government” and “wasteful spending.”

In the near future, we can not allow the sequester and other short-term budget gimmicks from Republicans deal fatal blows to Medicare and Social Security. It is important to shift away from an austerity debate, not only to protect America’s seniors, but also to devote attention and political capital to progressive priorities like the environment, immigration reform, and strengthening gun laws.

Make The Case for Progressive Tax Reform

Isaiah J. Poole — Sun, 24 Feb 2013 18:22:03 -0500

How to win the argument about the big economic challenges facing the American people

NUMBER 13 | February 25, 2013

Make The Case for Progressive Tax Reform
The Challenge	We need tax reform. Not because of any phony debt crisis, but so we can raise the necessary revenue to provide opportunity for all, reduce staggering inequality, grow the economy and end the jobs crisis. Conservatives peddle the fiction that America has a “spending problem” and there is no need for more tax revenue. The reality is the current tax code is still rigged for the 1 percent. Many billionaires are paying lower tax rates than their secretaries. Profitable multinationals are exploiting loopholes and oversea tax dodges to avoid taxes altogether. Instead of taxing what we don’t need, like Wall Street gambling, we tax what we require, like good jobs. The glaring flaws and gaps in the tax code are easy to spot – if the spotlight is actually put on them.
Make the Case	America’s number one priority is to end the jobs crisis. We need massive public investment not only to fully recover the 8 million jobs lost to the Great Recession, but to fix an economic foundation that was already disintegrating before the 2008 crash: an infrastructure that’s crumbling, a social safety net in tatters, an unsustainable dependence on fossil fuels and a public education system starved of resources, from preschool to affordable college. Yes, there is lots of waste, fraud and abuse in the federal budget. Powerful interests rake of billions in unneeded subsidies. Perverted priorities squander too much. But even with that, we still have a revenue problem. Fortunately, we can solve our revenue problem without kicking the middle class when it’s down or stifling the ability of businesses to create jobs. We can raise much of the revenues we need if we close wasteful loopholes, remove perverse job-killing tax incentives and fill the gaps that have allowed the richest Americans to escape contributing their fair share to America’s future. For example, Americans for Tax Fairness proposes: Closing tax shelters for the wealthy, which would bring in as much as $167 billion a year. Ending the ability of U.S. corporations to delay paying taxes on foreign profits, which would save $61 billion a year. Terminating destructive corporate tax breaks, including those regarding executive compensation, stock options and fossil fuel production; that would raise $16 billion a year. Taxing Wall Street trading to discourage reckless speculation, which would produce $35 billion a year. Placing a surtax on income above $1 million, which would collect $45 billion a year. These proposals would begin to close the loopholes in the tax code that serve to benefit the wealthiest American households that do not need the help. In the two years after the crash, the multimillionaires in the top 1 percent saw their average incomes rise 11 percent while the average income of everybody else shrank. Stunningly, American inequality is worse today than it was in 1774, even when you factor in slavery, according to new research from Harvard and the University of California. These tax reforms would also help generate jobs here at home. The financial speculation tax would help reduce the Wall Street gambling that helped blow up the economy. Ending incentives for outsourcing would help deter companies from moving jobs abroad. We don’t need a tax code that fosters staggering inequality. We need a fair tax code so we can rebuild America, put people back to work and make investments vital to America’s future.
The Winning Argument	We have a jobs crisis. We are failing to make the investments vital to a competitive economy and a vibrant middle class. Our infrastructure is crumbling. Our education system inadequate, with what everyone agrees is vital -- pre-school and college increasingly unaffordable. We need new spending priorities, and we need tax reform. Our tax code is fundamentally unfair, chock full of wasteful loopholes and perverse job-killing incentives that only benefit the top 1 percent and worsen staggering inequality. We need to shut down the loopholes and ripoffs in the tax code to strengthen the economy and to raise the necessary revenue to make investments vital to America’s future while helping to put people back to work.
Counterpoint	They say: We already raised taxes on the rich. Now it is time to address the real problem: spending. We say: Since 2011, the president and Congress have locked in more than $2 trillion in deficit reduction, with more than two-thirds of that from spending cuts. We’ve cut deeply enough – in fact, too deep – and more austerity would kill jobs. The fact is we have a revenue problem. Many billionaires are paying lower tax rates than their secretaries. Profitable multinationals are exploiting loopholes and oversea tax dodges to avoid taxes altogether. We aren’t raising enough revenue to invest in what we need to grow: jobs, infrastructure, education and homegrown clean energy. They say: We can’t punish success. It will destroy the incentives for job creators to invest in America’s growth. We say: We applied that conservative logic during the Bush presidency, slashing taxes on the wealthy and waiting for the jobs to come. They never did. The Wall Street Journal found the Bush record on jobs was the “worst on record.” We didn’t get jobs. We got growing inequality, a declining middle class, and the biggest economic downturn since the Great Depression. It’s time to go back to what works: a fair tax code that funds the investments we need to rebuild America and put people back to work. They say: 47 percent of Americans don’t pay any federal income tax. We don’t need to further burden the successful. We need everyone to contribute. We say: Now we know the truth. Conservatives don’t want to cut taxes for everybody. Conservatives only want to cut taxes for the rich and raise them for the poor. In fact, every working American pays taxes – payroll taxes, sales taxes, state and local taxes. Middle-class Americans are paying taxes at a higher rate than billionaires. Small businesses pay at a higher rate than multinationals that hide profits abroad. It’s not the poor who have gamed the tax code; it’s the rich and the powerful. Tax reform starts at the top.
Public Pulse	Even after the fiscal cliff deal, 66 percent of voters say the richest 2 percent should pay higher taxes. Only 9 percent say they should pay less. (Hart Research Associates for Americans for Tax Fairness) More than three out of four respondents agree that federal budget deficits should be addressed through a combination of tax increases and budget cuts. Only 19 percent agree with the Republican leadership position that the deficit should be reduced by budget cuts alone. (Pew Research Center) 64 percent of voters say that large corporations should pay more in taxes.(Hart Research Associates for Americans for Tax Fairness) 66 percent of voters say revenue from closing loopholes should go toward public investments and deficit reduction. Only 23 percent say revenue from closing loopholes to go toward paying for lower tax rates.(Hart Research Associates for Americans for Tax Fairness)
Hot Facts	For every dollar in new revenue raised through tax increases since 2011, we’ve cut $2.50 out of federal government programs: $1.5 trillion in spending cuts versus $600 billion in tax increases. (Center for Budget and Policy Priorities) The top 1 percent of households saw their average federal tax rate fall 17 percent between 1979 and 2009. (Congressional Budget Office) Corporations are paying a fourth of what they paid 60 years ago as a share of federal revenues. (Americans for Tax Fairness ) Federal taxes as a share of the total economy haven’t been this low since 1950. The last time we had a balanced budget (1998-2001), revenues were 20 percent of gross domestic product; now revenues are just 15.4 percent of GDP. (Ezra Klen, The Washington Post, via Americans for Tax Fairness)
Tweet This	Since 2009, income of top 1% is up, income of bottom 99% down. End the rigged tax code. Make rich pay fair share http://goo.gl/vXJRD @ourfuture Conservatives: Raise taxes on bottom 47%, cut them for rich. Progressives: Raise taxes on top 2%, invest in jobs http://goo.gl/vXJRD @ourfuture
Learn More	“Policy Options to Raise Revenue,” Citizens for Tax Justice National Priorities Project Sen. Bernie Sanders' Progressive Budget Americans for Tax Fairness fact sheet Financial Accountability and Corporate Transparency Campaign
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Why Social Security Recipients Shouldn't Be Shackled With The Chained CPI

Isaiah J. Poole — Fri, 08 Feb 2013 13:59:23 -0500

How to win the argument about the big economic challenges facing the American people

NUMBER 12 | February 12, 2013

Why Social Security Recipients Shouldn't Be Shackled With The Chained CPI
The Challenge	As conservatives relentlessly demand more and more spending cuts in their crusade to impose austerity on our economy, they have fixated on cuts to benefits offered by Medicare, Medicaid and Social Security – the core pillars of family security. One particularly noxious idea is the "chained CPI.” Conservatives like it because it would cut Social Security benefits immediately for everyone in the system – if we let them replace the more scientific index we have used for years to make sure benefits keep up with the cost of living. And some Democrats like it because it’s a way to give deficit hawks real spending reduction – while pretending it is simply a "technical fix" – not really a benefit cut. At this writing, President Obama’s staff pretends it’s a better index – and the president keeps offering it as part a “Grand Bargain.” But the chained CPI is a political trick, not a technical fix. It is a hidden benefit cut that would shackle seniors with lower benefits and thus less security over time. With seniors in the bottom 40 percent of the income scale dependent on Social Security for almost 90 percent of their income, it would dramatically raise poverty levels among the retired, the disabled and the widowed. Tremendous pressure to enact this change is being exerted by private groups funded by Wall Street advocates of Social Security retrenchment or even privatization. They seek to use the current deficits – the result of the economic collapse caused by Wall Street's excesses – to force unpopular cuts in the security programs American families rely on. They do so by claiming that "entitlements" cause our long-term debt problems, lumping Social Security in with health care programs like Medicare and Medicaid. They claim Social Security is going bankrupt without changes. And then they call for "reform," with the supposedly technical fix of a lower cost of living adjustment masking a deep cut in benefits. A powerful bipartisan array of Washington insiders has echoed this argument, from deficit jeremiads like Erskine Bowles and Alan Simpson, the Bipartisan Policy Center's Deficit Reduction Task Force and the Heritage Foundation to established liberal groups like the Center for American Progress and Center for Budget and Policy Priorities. Without a massive mobilization by an informed public, there is a clear and present danger that within the next few months the economic security of the elderly, disabled and surviving children will be needlessly compromised for decades to come by our country's political elites.
Make the Case	A "chained CPI" differs from the standard consumer price index we're familiar with because it claims to take into account “substitutions” — the degree to which consumers will change what they buy in response to price increases. For example, if the price of going to the movies dramatically increases, consumers might instead rent more DVDs to save money. Now we all make substitutions – but many of the things seniors buy are things you just can’t substitute, like medicines, or doctors visits, or basic foods. But the chained CPI wasn’t designed with seniors’ buying habits in mind. Applying it to Social Security assumes seniors make the same substitutions as the average consumer, which they often can’t afford. Here are seven reasons shackling seniors and the disabled with a chained CPI is just plain wrong. 1. It's a huge benefit cut that seniors, veterans and the disabled cannot afford. It would cut benefits by $135 billion over 10 years and much more in ensuing decades as its impact is compounded. It would also cut another $24 billion from veterans' and federal retirement benefits. The Social Security recipient who retired at age 65 in 2012 would be receiving $658 a year less in benefits under the chained CPI calculation by the time he or she is 75, an almost 4 percent cut; by 85, that person would be getting $1,147 less a year, a 6.5 percent benefit cut. This is a feature, not a bug; the budget savings from the benefit cuts are the key selling point of the chained CPI. These cuts would hit the oldest seniors the hardest, exactly when they are the most economically vulnerable, right when they are likely to have exhausted their retirement savings and are facing their highest out-of-pocket health care costs. 2. The chained CPI is patently inaccurate at measuring the cost of living of the elderly and disabled. This is a political trick, not a technical fix. Since 1975, Social Security benefits are adjusted annually based on what is now called the consumer price index for urban wage earners and clerical workers (CPI-W). Ironically, its cost calculations exclude people outside the workforce, and thus most Social Security beneficiaries. Recently, the government's Bureau of Labor Statistics has developedan experimental CPI-E that more directly measures the cost of living of people age 62 and over. If the chained CPI were a technical fix, its advocates would be pushing to perfect the CPI-E and adopt it as the basis for Social Security's cost of living adjustments. But the CPI-E indicates that the cost of living of the elderly is rising faster than that of the overall population.So adopting a true measure of seniors' costs would increase benefits and cost more money. Advocates of switching to the chained CPI don't want more accuracy. They invented the chained CPI to shackle seniors with lower benefits in order to cut spending. 3. The chained CPI violates Social Security's promise: that Social Security's cost-of-living adjustments should maintain the purchasing power of benefit levels over time. This is no minor detail. The value of pensions or 401(k) balances that are not inflation-protected typically decline by half over 20 years. Virtually no retirement savings vehicles available in private markets offer inflation protection for life. Social Security does. It is one of the program's most important defining features. Given that the average benefit today is only $1,153 per month, that 36 percent of beneficiaries get 90 percent or more of their income from Social Security, and that 65 percent of Americans get 50 percent or more of their income from the program, this inflation protection is critical to recipients' economic security. It's just obscene to shackle seniors and the disabled to benefits that won't keep up with rising costs. Faced with the soaring costs of drugs, seniors already are sometimes forced to cut back on food or on medicine to make ends meet. We should be raising benefits to alleviate those pressures, not cutting them because to reflect the savings they exact. 4. The chained CPI flagrantly flies in the face of public opinion. By a two-to-one margin in one recent poll, respondents said using the chained CPI was "totally unacceptable" as a way to adjust Social Security benefits. Other polls have found that overwhelming majorities of Americans are opposed to undertaking Social Security reform in the context of deficit reduction talks. The most recent polling by the National Academy of Social Insurance shows that a majority of Americans across the political spectrum think Social Security benefits should be raised, not lowered – and are willing to pay more in taxes to protect those benefits. By far the most popular reform is to raise the cap on the payroll tax, so that the wealthier Americans pay at the same rate as low-wage workers. 5. The chained CPI will hurt more than just the elderly. The groups of Americans that would also see their benefits cut if the chained CPI were implemented government-wide include people with disabilities; widows and children who receive survivor's benefits; disabled veterans, particularly those who are totally disabled and therefore eligible for both veterans benefits and Social Security Disability; lifelong public servants who retire from the federal government, and anyone who retires from the military after serving our country for decades. 6. Social Security benefits are modest and should be increased, not cut. Social Security retirement benefits average just $14,900 a year, and nearly 5 million retirees live below 125 percent of the federal poverty level. Already their current cost-of-living adjustments do not compensate for the fact that they spend roughly twice as much on health care as the average worker or urban consumer and a larger percentage of their income on basic necessities. A chained CPI only makes that problem worse. The Center for Retirement Research at Boston College has estimated that more than half of the nation's households would be unable to maintain their standards of living during their retirement years, given the damage the 2008 financial crash did to housing values, stock portfolios and worker earnings. Given our national retirement income security crisis, policymakers should be increasing Social Security benefits, not cutting them. 7. The advocates of the chained CPI implicitly admit that it is not an accurate measure of inflation faced by seniors. They are now scrambling to propose modifications that will "protect" the oldest and poorest seniors from the effects of a change they claim is technical. But if the chained CPI were an accurate measure of the cost of living, why would 80-year-olds need protection? In fact, the measures proposed to blunt the effect of the chained CPI on vulnerable populations are shamelessly inadequate. For example, even with the most commonly proposed compensatory measure – a bump-up in benefits after 20 years, starting at age 82 – an 85-year-old would still lose more than $12,000 in benefits over a 20-year period.
Counterpoint	When they say: The chained CPI is more accurate. You can say: The chained CPI is a political trick, not a technical fix. It is not more accurate for seniors and people with severe disabilities. As 250 top economists and more than 50 social insurance experts with Ph.D.s in related fields recently pointed out in an Economic Policy Institute statement : "Since elderly and disabled people spend a greater share of their incomes on necessities such as health care, rent, and utilities, and since this population is also less mobile, a chained COLA based on the spending patterns of workers or the general population may overestimate the ability of Social Security beneficiaries to take advantage of cheaper substitutes." To obtain a more accurate cost-of-living adjustment, we should give the experts the resources needed to perfect the CPI-E (a consumer price index for elderly consumers) and then consider adopting it for determining Social Security COLAs. It would surely end up increasing rather than decreasing the adjustment for inflation. When they say: If we reduced the COLA, wouldn't that just slow the rate of growth of benefits rather than cut benefits? You can say: Cost of living adjustments don't increase benefits, they simply allow them to keep pace with inflation. A lower adjustment will result in benefit checks that have less purchasing power. This is a benefit cut masked as a technical fix. When they say: Isn't the chained CPI a relatively small cut? You can say: The chained CPI snowballs year after year, so the cut is the largest for the oldest seniors who need it the most. For the average worker retiring at age 65 in 2012, the chained CPI would cut benefits by more than $1,000 a month by the time that worker is 85. The cumulative effect of the cut gets worse over time. When they say: Can't we make accommodations in the chained CPI to protect the most vulnerable people? You can say: No. None of the proposed "sweeteners" to cushion the impact of the chained CPI on vulnerable groups holds them harmless – far from it. The proposed modest increase in benefits after 20 years (sometimes called the "birthday bump") still leaves the average senior with a net cumulative loss of $12,000 by age 85 and over $16,000 by age 95. When they say: The chained CPI is a necessary part of getting our deficits under control You can say: Social Security has not and cannot by law contribute to the federal debt. And the program is too important to be used as a bargaining chip in negotiations about deficits that Social Security has not contributed to. When they say: Isn't the chained CPI necessary to help balance Social Security's finances? You can say: Social Security's finances should be addressed on their own, not in the midst of the hysteria surrounding deficits that have nothing to do with Social Security. In fact, Social Security is in good shape, with current assets covering benefits for the next 22 years. To strengthen the long-term solvency in Social Security, there are far better policy options than cutting benefits. For example, lifting the Social Security tax cap would eliminate at least 70 percent of Social Security's modest 75-year shortfall.
Public Pulse	62% of individuals called the Simpson-Bowles recommendation to adopt the chained CPI "totally unacceptable," while 31% said it was "acceptable." (Democracy Corps) 60% of Americans thought that it was "unacceptable" to change Social Security to increase at a slower rate in order to strike a deal to avoid the January 1 "fiscal cliff." ( Washington Post ) Only 8% of individuals support cutting "scheduled benefit increases for future retirees" when asked to choose one preferred Social Security reform (New York Times/CBS). 56% of individuals consider preserving current Social Security and Medicare benefits a higher priority than reducing the budget deficit" (Pew). 77% of Americans consider cutting Social Security "mostly or totally unacceptable" in order to reduce the deficit ( Wall Street Journal/NBC ). Two-thirds of people support raising payroll taxes on the upper-income earners, compared with 38% who support raising Social Security's "eligibility age." (Pew Research) . 66% of Americans, including 45% of Republicans and 64% of Independents, favor increasing income taxes for upper-income Americans, compared with 42% who favor making "significant changes" to Social Security and Medicare" (Gallup/USA Today). 57% of respondents think that reducing retirement benefits for people who are currently under age 55 is a bad idea (Gallup). 62% of individuals agreed that the government needs to keep its promises to older people by maintaining their benefits, even for those who are well-off (Pew Research).
Hot Facts	$55 a month: That's how much less a 65-year-old retiree today would end up getting 10 years from now than they would under the current cost-of-living adjustment. Health expenses take up almost twice as much a share of a senior's monthly expenses as it does of average workers, and health care costs rose at twice the rate of inflation in 2012. Even with Social Security, almost one in seven seniors fall below the poverty line when all of their expenses are taken into account, according tothe Census Bureau's supplemental poverty measure.
Tweet This	#ChainedCPI is a #SocialSecurity cut that gets deeper every year, hitting the oldest hardest. http://bit.ly/WIbHsO #SmartTalk @ourfuture Average Social Security check under $1,200/month. Don't chain seniors to poverty with #ChainedCPI http://bit.ly/WIbHsO #SmartTalk @ourfuture #ChainedCPI is NOT more accurate for Social Security beneficiaries. It just cuts benefits http://bit.ly/WIbHsO #SmartTalk @ourfuture Instead of #ChainedCPI, make millionaires pay same rate into Social Security as the rest of us. http://bit.ly/WIbHsO #SmartTalk @ourfuture 2 years of no Social Security COLA—and now they want to cut it?! Stop the #ChainedCPI. http://bit.ly/WIbHsO #SmartTalk @ourfuture
Learn More	» National Academy of Social Insurance brief on Chained CPI » OurFuture.org Chained CPI blog page » The New York Times: "Misguided Social Security ‘Reform'" (Editorial) » Economic Policy Institute's Retirement research page » Center for Economic and Policy Research's Social Security and retirement issue page » Smart Talk on Protecting Social Security
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The Next Austerity Disaster

Isaiah J. Poole — Mon, 28 Jan 2013 18:01:32 -0500

How to win the argument about the big economic challenges facing the American people

NUMBER 11 | January 28, 2013

The Next Austerity Disaster
The Challenge	The United States is in the midst of the most protracted unemployment crisis in modern history, and for vast segments of the population, the recession has never ended. Wages are still sinking; more than 20 million people are in need of full-time work. Yet, the national debate is fixated on fixing the debt rather than fixing the economy. This is "austerity" economics, which demands cuts in government spending in the belief that this will reduce government deficits, even as it costs jobs and imposes hardships on people. Mass unemployment, declining wages, and faltering growth suggests the United States has already suffered too much austerity, too soon. And yet the political debate is focused on how much more to impose. Washington imposed $1.5 trillion in spending cuts over 10 years in the 2011 “debt ceiling” deal. Washington stumbled past the year-end “fiscal cliff” with a deal that featured about $600 billion in tax hikes over ten years, including returning rates for the richest Americans back to Clinton era levels, and ending the payroll tax holiday, adding 2 percent to every working family’s payroll tax rate. Now Congress has created an even more precarious fiscal peril to extort even greater cuts. Between now and the middle of May, we’ll hit the debt ceiling again, the automatic cut (sequester) of military and domestic budgets for the remainder of the year will kick in, and the temporary appropriations for government will expire. This sets up a new negotiation to forestall these ruinous calamities, now with Social Security, Medicare and Medicaid directly targeted. The leaders of both parties suggest that more deficit reduction is needed and that it would help the economy. Not surprisingly, polls suggest that most Americans believe that cutting spending will help the economy, not harm the recovery. The reality is that spending is not out of control, the deficit is already plummeting, and we should be focused on fixing the economy to make it work for working people, not on austerity driven by wrong-headed deficit hysteria.
Make the Case	Start with the struggles families are facing. The budget debate now underway in Washington, focused on “fixing the debt,” misses the point. Americans are still suffering record levels of long-term unemployment. Poverty has risen to a level unseen in generations. Inequality is at new extremes. Wages are at the lowest percentage of the economy on record, while corporate profits are at the highest. We should be focused on fixing our economy. Challenge the austerity myth. And here’s the real deal. You can’t fix the economy by “fixing the debt.” Cutting spending now will only slow the recovery, put more people out of work – and as we have seen in Europe, end up adding to our debt burdens. In fact, fixing the economy is the necessary first step in getting our books back in order. Our deficits are largely due to the recession, with the costs of unemployment and the lost revenue from the loss of jobs. In these conditions, the best deficit reduction program is to put people back to work. Even the slow growth we’ve witnessed has begun to reduce our deficits as jobs have been created. Despite all the hysteria, deficits are down by 25% compared to the economy, according to the Congressional Budget Office. They are falling faster than anytime since the demobilization at the end of World War II. And our debt level is basically stabilized for the next decade. More austerity – whether balanced between taxes and spending as the president calls for or focused just on spending cuts as Republicans suggest – will only serve to slow growth, cost jobs, and impede the recovery needed to get our books back in shape. Worse, the austerity debate is now focused on whacking at the basic pillars of family security – Social Security, Medicare and Medicaid. The cuts under discussion – slowing the inflation adjustment for Social Security, raising the eligibility age for Medicare or the retirement age for Social Security -- would harm the most vulnerable in our society. Describe the way out. Fixing our economy requires a very different agenda than mindless cuts. We need to invest in areas vital to our future, and stop squandering resources on things we don’t need and can’t afford. End the wars abroad, bring our troops home, and invest the savings in rebuilding America – putting people to work while modernizing our decrepit infrastructure, from roads and rail to broadband and the electric grid. End the subsidies and tax breaks to big oil companies and invest the resources in research and development to capture a lead in clean energy and the green industrial revolution sweeping the country. Crack down on global tax havens, tax Wall Street speculation, tax investors at the same rate as workers, and use that income to provide every child with the opportunity to learn, from universal preschool to affordable college. Lift the minimum wage, empower workers to gain a fair share of the profits they help to generate and curb perverse CEO compensation schemes that give them million-dollar incentives to ship jobs abroad. And fix the sole source of our projected long-term debt problems – our broken health care system. Don’t cut benefits for Social Security, Medicare and Medicaid. Instead, take on the insurance and drug company lobbies that have made our health care cost nearly twice what the rest of the industrial world pays.
Case in Point	We’ve done this before. The U.S. came out of World War II with a much higher debt burden than now – 125% of GDP. Yet worried about the GIs coming home to an economic depression, our leaders focused on fixing the economy. They passed the GI Bill that educated a generation. They subsidized housing and built the suburbs. They subsidized the conversion of wartime plants to civilian production. They sent billions of dollars to Europe to create allies and markets. They built the broad middle class that made America exceptional. They generally ran deficits, added to the total national debt, but the economy grew faster, and by 1980, the debt was down to less than 40% of gross domestic product and not a problem. We call them the greatest generation. We would do well to learn from them. The U.S. isn’t Greece, but it must avoid imitating Europe. The International Monetary Fund's chief economist recently acknowledged the failure of austerity in Europe, noting that spending cuts had a much more destructive effect on growth – driving the European Union back into recession – than the IMF had predicted. Austerity economics cost jobs and torpedoed growth. And it ended up increasing the debt burdens of the governments.
Counterpoint	When they say: We're spending our grandchildren's money with all these government deficits. You can say: We should be investing their future, not dooming them to a life of diminished opportunity and an old age filled with hardship and deprivation. We want to leave them opportunity in a robust economy. You want to leave them reduced security from Social Security and Medicare. When they say: We can't afford these “entitlements” any more. You can say: “Entitlements”? You can't talk about Social Security, Medicare, and Medicaid in the same breath. Social Security is still in surplus, forbidden by law from contributing to the deficit, and its mild long-term problems can be fixed by requiring high income earners to pay the same rate as everyone else. And the problem with Medicare and Medicaid isn't that their benefits are “generous” – they're not – but that our profit-driven health care system is too costly and must be fixed. When they say: We don’t have a tax problem; we have a spending problem. You can say: Billionaires are paying lower tax rates than their secretaries. Many multinationals like General Electric hide profits abroad and pay no taxes at all. Big oil and prescription drug companies pocked billions in unneeded subsidies. The Pentagon is spending almost as much as the rest of the world combined on the military. We’ve got both a tax problem and a spending problem. But our real challenge is making the investments we need to rebuild the country and educate the next generation – and cracking down on the unfair tax breaks and wasteful spending to pay for them. When they say: We can’t afford trillion dollar deficits. You can say: We can’t afford over 20 million people in need of full-time work, falling wages and a sinking middle class. In fact, the deficits are coming down in relation to the economy faster than anytime since the end of World War II. Any faster, it just might drive us back into recession. To fix the deficits, we need to fix the economy first. And focusing on deficits now won’t fix the economy.
Public Pulse	At least two-thirds of Americans would support policies that reduce the deficit by asking the wealthiest Americans to do a little more: remove the $110,000 earnings cap on Social Security payroll taxes, increase Medicare premiums on higher incomes, limit mortgage deductions on expensive homes and end them on second homes, and end $1 billion in tax giveaways to the wealthiest (Democracy Corps). By 64 percent to 17 percent, voters say we should maintain Social Security and Medicare benefits, and address the deficit by increasing taxes on the rich rather than reducing Social Security and Medicare benefits (AFL-CIO). 65 percent of respondents support providing $55 billion dollars over three years to modernize schools and rehire teachers (Democracy Corps). 51 percent support investing $234 billion dollars in infrastructure, including rebuilding highways and bridges, as well as creating an infrastructure bank to finance major projects. (Democracy Corps). 58 percent of people believe there is no need to cut spending for Medicare to reduce the federal deficit. (Kaiser Health Tracking Poll)
Hot Facts	If we do nothing else, federal debt as a percentage of gross domestic product would continue to decline, not increase, for the rest of this decade (Center for Budget and Policy Priorities). If we had enacted President Obama’s proposed 2013 budget, which included $140 billion in jobs program spending, there would have been an additonal 1.1 million Americans back at work, paying taxes instead of collecting unemployment insurance. (Economic Policy Institute). Failing to spend money to maintain and upgrade our ports, waterways and airports could lead to the loss of as many as 1 million jobs (American Society of Civil Engineers). Austerity measures in Europe are predicted to shrink the Euro zone economy by as much as 4 percent, causing deficits to increase in almost every country (National Institute of Economic and Social Research).
Tweet This	#FixTheDebt now won’t fix the economy. Fix the economy with jobs first. #Letsgettowork http://t.co/D7ZOk10b #Tellmewhy conservatives want to follow Europe’s failed austerity. Focus on rebuilding #middleclass instead http://t.co/D7ZOk10b #FixTheDebt by taking on health care lobby, not the sick and elderly. Say no to austerity. http://t.co/D7ZOk10b
Learn More	Office of Management and Budget Report Pursuant to the Sequestration Transparency Act of 2012 “Who Would Promote Job Growth the Most in the Near-Term,” The Economic Policy Institute “U.S. now on pace for European levels of austerity in 2013,” The Washington Post “Infrastructure Costs Americans More to Neglect than Maintain,” America 2050 “Growth Forecast Errors and Fiscal Multipliers,” The International Monetary Fund “Top 1% Got 93% of Income Growth as Rich-Poor Gap Widened” Bloomberg News Campaign for America’s Future “Austerity Watch” page
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Holding the Economy Hostage

Isaiah J. Poole — Wed, 23 Jan 2013 17:55:10 -0500

How to win the argument about the big economic challenges facing the American people

NUMBER 10 | January 22, 2013

Holding the Economy Hostage
The Challenge	Conservatives are trying to extort unpopular cuts in vital programs by holding the economy hostage. Their simple message: Cut Social Security, Medicare and Medicaid (and programs for the 99 percent), or we'll kill the economy. Here’s how they do it: They threaten to blow up the economy by assembling a cluster of austerity bombs triggered to explode this spring: (1) the automatic “sequester” – cut – of $110 billion from military and domestic spending (or nearly 20% in the last half of the fiscal year; (2) the shutdown of government completely when the continuing resolution providing funds for the year runs out on March 27, 2013; and (3) hitting the debt ceiling, which would force the U.S. to default on debts already incurred by the Congress. Any one of these would have devastating effects on jobs and on economic growth. All of them would simply be ruinous. Conservatives say that they may have to shut down the government to let the president know that they are serious about cutting spending on Medicare, Medicaid and Social Security. President Obama has stated he would not negotiate on the debt ceiling, and Republicans rescheduled that threat to line up with the sequester and the potential appropriations expiration. The president has agreed to negotiate to avoid the sequester and the shutdown. America is being held hostage again. In 2011, Congress threatened to default on the debt ceiling; the president negotiated cuts. In December, Congress threatened to go over the “fiscal cliff”; the president negotiated. In total, the White House has agreed to spending cuts that total $1.5 trillion (or $1.7 trillion including interest savings) over 10 years. And the New Year’s “fiscal cliff” deal will raise $600 billion in taxes over 10 years. But all that has only encouraged them. Now they have triggered the biggest set of austerity bombs in history to go off if they don’t get their way.
Make the Case	Holding America hostage is a ridiculous way to negotiate a budget. It is time to say, "No more." The debt ceiling should be lifted without preconditions. The sequester – the reckless across-the-board automatic cuts – should be cancelled. Negotiations should proceed on appropriations for the remainder of the year. Call their bluff. When President Bill Clinton successfully stood up to Newt Gingrich’s attempts to make dangerous spending cuts, Gingrich refused to pass a budget. Rather than cave, Clinton let him close the government – twice. Clinton fought back, standing clearly as the protector of popular public priorities: Medicare, Medicaid, education and the environment – M2E2 – and the country rallied to his side. Gingrich backed down, and Clinton’s popularity soared headed into his reelection campaign. Austerity is a threat, not an answer. America’s biggest problem is not deficits, it is the jobs crisis. More than 20 million people are in need of full-time work. Wages are at a record low and corporate profits at a record high as a portion of the economy. We have a jobs crisis. Deficits aren’t rising; they are falling faster than is prudent. Deficits in fiscal 2012 are down 22 percent from fiscal 2010 as a portion of the economy and falling faster than any time since the end of World War II. Any faster and the cuts and tax hikes could easily drive the economy back into recession. But the reason deficits are coming down is the growth of jobs. We need to focus on getting the economy going, not on more austerity. No Cuts in Social Security, Medicare or Medicaid Benefits. Americans don’t believe that you need to cut benefits in programs vital to family security – and they are right. We need to get our economy working. We don’t need to slash programs for the most vulnerable. Go after what hurts the economy, not what helps families. If there is more deficit reduction, it should focus first on cutting what gets in our way, not on cutting what we depend on. And we can raise revenues without hitting the middle class. A financial transaction tax would generate billions while helping to curb Wall Street gambling. Shutting down overseas tax havens would give companies incentives to invest at home. Cutting subsidies to big oil would end wasting resources on the most profitable corporations in history. Ending the wars and using the money saved to invest at home would help get our priorities straight.
Case in Point	♦ Conservatives claim we have not made a serious dent in the deficit so far. But they are wrong. Bloomberg News recently noted that "federal outlays over the past three years grew at their slowest pace since 1953-56, when Dwight D. Eisenhower was president." Federal spending was 25 percent of the economy in 2009; it's now below 23 percent. The majority of savings politicians have achieved so far, including the January 1 deal, have been spending cuts. They have made $1.5 trillion or 72 percent in spending cuts – and only 28 percent come from new revenue. Most of the spending cuts conservatives are now demanding will do real damage – to the social safety net, to programs to create opportunity for poor Americans, or to essential investments in education, research and infrastructure. The one area of spending cuts conservatives want to rule out is the Pentagon budget, which has plenty of waste to cut. And there is still plenty of room for getting new revenues – from taxing capital gains and dividends just like income from labor, from closing loopholes that benefit big corporations and the top 2 percent of Americans. ♦ USA Today reported warnings from business leaders before the January 1 cliff. In a letter signed by 158 corporate chief executives, The Business Roundtable released a letter warning "The United States will suffer significant negative economic, employment, and social consequences for going over the fiscal cliff," the CEOs said in a letter to congressional leaders. "In many cases, the damage will be long-lasting, if not permanent. But it does not have to happen." ♦ And of course industries that depend on military spending should be expected to step in. Here’s a statement by Marion C. Blakey, President and CEO of the Aerospace Industries Association on the failure to fix sequestration in the fiscal cliff deal: "Sequestration is a slow-motion catastrophe for our military forces, our space program and virtually every critical function of our government from air traffic control and border security to food inspection and more. ... More than 2 million Americans across all sectors of the economy will lose their jobs starting in 57 days if our political leaders fail to fix the self-inflicted wound of sequestration and the dangers it poses to our war-fighters and national security." ♦AFL-CIO President Richard Trumka, commenting on the Senate fiscal showdown agreement, said, "Because of Republican hostage taking, the deal simply postpones the $1.2 trillion sequester for only two months and does not address the debt ceiling, setting the stage for more fiscal blackmail at the expense of the middle class. Instead of moving to address our nation’s real jobs and public investment crisis, our leaders will be debating a prolonged artificial fiscal crisis."
Counterpoint	When they say: We can’t keep kicking the deficit problem down the road while each year America’s debt and deficits get larger. We may have to shut down government to make the president get serious about cutting entitlements. You can say: The American people don’t want the cuts you are trying to impose on Social Security, Medicare and Medicaid. And you are wrong that the deficit is still growing. It's down 25 percent and falling faster than any time since the end of World War II. More spending cuts and tax hikes are just kicking it. We’d be wise to make sure the economy keeps growing before inflicting deep cuts. And that means we should focus on cutting the stuff that hurts the economy, and investing in areas vital to jobs and our future. When they say: We don’t have a revenue problem, we have a spending problem. Our goal should be at least $4 trillion in deficit reduction over 10 years. We’ve just raised taxes on wealthy Americans, and we can’t do more tax increases – so we’ve got to cut a lot of spending to meet the goal of reducing the deficit. You can say: That’s a recipe for recession. Cutting the deficit by $4 trillion over 10 years is an artificial and arbitrary goal that pays no attention to how many people are still in need of work. Cutting that much could throw the economy into recession and throw millions of Americans out of work. Our goal should be to stabilize the deficit as a percentage of the size of the economy – and the best way to achieve that goal is to invest in jobs and grow the economy. When they say: We can reform Social Security without hurting beneficiaries by reducing over time the overly generous adjustments for inflation. Even President Obama thinks we should switch to the so-called “chained” CPI. And if we did that, we would save more than $236 billion over the next 10 years. You can say: This is a hidden cut in Social Security benefits (and a stealth hike in middle-class taxes). Social Security is in surplus; by law it cannot contribute to the deficit. If Social Security needs “reform,” then that should be done thoughtfully and separate from threats to shut down government in budget hysteria. And if the inflation adjustment is wrong, let’s sponsor a serious study about the costs seniors face. You haven’t done that because it’s likely, given their need for health care, that the adjustments should be more generous, not less. We won’t allow you to use this fake crisis to extort cuts in Social Security. (For a good case against imposing the chained CPI in the context of budget extortion, see this January 13 New York Times editorial, "Misguided Social Security ‘Reform.’") When they say: Well, everyone agrees that rising Medicare costs are the long-term drivers of our deficit problem. We have to issue these threats to force the President to come up with sensible proposals to cut Medicare benefits. You can say: It is true that over the decade and beyond, Medicare costs are projected to grow. But the reason for those projections is the expected growth of costs in the private health care economy. And in fact, the rise of health care costs slowed to only 3.9 percent in 2011. As a result costs for Medicare (which is more cost effective) have been growing at only 3 percent, less than half the rate in past years. Nobody knows exactly why health costs have suddenly slowed, but if the reforms in the Affordable Care Act, just coming online, can keep them at these levels, then we have no long-term deficit problem. We don’t have an entitlements problem; we have a broken health care system. If we spent per capita what other industrial countries spend on health care, we would be projecting surpluses for as long as the eye can see. We have to fix our health care system, not strip seniors of Medicare benefits.
The Public Pulse	Almost six in 10 Americans (58 percent) agree that raising the debt ceiling should be kept separate from decisions regarding spending cuts. Only slightly more than a third of voters support the Republican strategy of holding the debt ceiling hostage to their budget demands. (The Washington Post-ABC News) ♦ By a margin of 60 to 34 percent, Americans reject as unacceptable changing the way Social Security benefits are calculated so that benefits increase at a slower rate than they do now (The Washington Post-ABC News). ♦ By a margin of 3 to 1, voters in the swing states of Ohio, Florida and Virginia don’t believe Social Security and Medicare need to be cut to reduce our deficits (The Washington Post-Kaiser Foundation). ♦ Given choices for reducing the deficit, including raising taxes on the wealthy and reducing Medicare benefits, 83 percent of American’s oppose cutting Medicare (13 percent supported those cuts) and 68 percent favored “raising taxes on households with incomes higher than $250,000 per year (The Washington Post-Bloomberg News). ♦ 58 percent disapprove of reducing programs to help lower-income Americans in order to reduce the national debt and deficit (Pew Research Center). ♦ 66 percent of Americans, including 45 percent of Republicans and 64 percent of independents, favor increasing income taxes for upper-income Americans, compared with 42 percent of Americans who support making “significant changes” to Social Security (Gallup). ♦ 64 percent of Americans believe the fiscal cliff measures (now postponed) would harm the country and their own personal financial situation, while 33% disagree. A majority of those in all key subgroups are worried, the most concerned group was “pre-retirement-age adults,” those 50 to 64 years old (Gallup).
Tweet This	New conservative threat: Cut Social Security, Medicare or we kill the economy. Americans hate threats and cuts. #smarttalk http://t.co/D7ZOk10b @OurFuture Just say no to made-up budget crises. No to short-term debt ceiling increase. No to sequester. #smarttalk http://t.co/D7ZOk10b @OurFuture Tell Congress: Go after what hurts working families, not what helps them. Focus on growing the economy. #smarttalk http://t.co/D7ZOk10b @OurFuture
Learn More	» "Debt, Deficits, and Demographics: Why We Can Afford the Social Contract," Center for Economic and Policy Research » "Budget Battles in the Lame Duck and Beyond," Economic Policy Institute » Center for Budget and Policy Priorities budget analysis page

Why We Reject The Simpson-Bowles Deficit Reduction Plan

Isaiah J. Poole — Mon, 03 Dec 2012 21:05:43 -0500

There are a lot of myths about “Simpson-Bowles,” the plan being circulated by former Republican senator Alan Simpson and former Clinton administration official Erskine Bowles that is being touted as a balanced, reasonable way to reduce the federal deficit. In reality, it is neither balanced nor reasonable. Here is what you should know about the Simpson-Bowles plan.

Alan Simpson is a conservative who has argued for cutting Social Security benefits for decades, deriding it as a “Ponzi scheme” and “a milk cow with 310 million tits.” Erskine Bowles, who made a fortune as a Wall Street investment banker, praised the House Republican budget of Rep. Paul Ryan, which would have turned Medicare into a private insurance voucher, slashed Medicaid and locked in deep tax cuts to the top 2 percent, as “sensible.”

While Simpson and Bowles were named to lead President Barack Obama's National Commission on Fiscal Responsibility and Reform, but they were unable to get the bipartisan commission to agree to their recommendations. So the Simpson-Bowles plan everyone is talking about is just that: the personal opinions of two men.

The plan is not the balanced or “centrist” plan its supporters claim. The plan urges $2 in spending cuts for every $1 in additional revenue. In other words, while the vulnerable are being asked to bear real pain as the economic supports they depend on weaken, little is being asked of the wealthiest Americans, who today are not doing their fair share to rebuild the economy.

Here are the real details:

The Simpson-Bowles plan calls for $2.9 trillion dollars in spending cuts. The majority of these cuts will be made to Social Security, Medicare and Medicaid. Such cuts will destroy the social supports that protect the middle class.

While the the Simpson-Bowles plan would cut benefits to elderly, college students and veterans, it would extend the Bush tax cuts for the richest 2 percent of Americans. This continues to make the middle class pay for benefits for the ultra-rich.

Simpson-Bowles would slash Social Security benefits, which will hurt seniors and middle-class Americans who rely on Social Security for a stable retirement. One way it would cut benefits is by raising the retirement age by four years, to 69, requiring Americans to work longer. This is justified as being consistent in an increase in life expectancy, but that fails to recognize that this so-called increase in life expectancy has been felt, primarily, by the super-rich.

Unemployment was around 9 percent when Simpson and Bowles made their plan public, and will exceed 6 percent for years into the future. And yet their plan would slash federal spending on infrastructure and investments in jobs. The perversity of this is that job creation is the most important thing we can do to raise revenue to reduce the deficit, and put Social Security and Medicare on a more firm financial footing.

The Simpson-Bowles plan would cap revenues flowing into the federal treasury at 21 percent of gross domestic product, which would take government service levels back to the late 1950s. That was before there were Medicare and Medicaid, and the range of other government services that keep us safe and support broad prosperity. The need for those services won’t go away; instead already strained state and local governments would instead be pressured to step into the void, often less efficiently and equitably.

The Simpson-Bowles plan promises to make up for lower tax rates for the wealthiest Americans by closing closing tax loopholes and ending tax credits. But there is no way closing tax loopholes and ending tax credits can make up for what the public loses by making the 2001 and 2003 Bush administration tax cuts for the wealthiest Americans permanent. And the tax breaks and credits that Simpson and Bowles would protect benefit pharmaceutical and technology companies more than middle-class Americans. This rewards companies that already contribute to America’s rising health care costs.

Meanwhile, the Social Security cuts called for in the Simpson-Bowles plan would target the benefits of the lowest 60 percent of workers.

While the Simpson Bowles plan is heavy on cuts to Social Security, Medicare and Medicaid, it would only make defense spending cuts of $100 billion dollars over 10 years. The defense budget in one year, 2010, was $693 billion. Clearly, $100 billion is a drop in the bucket. A commission of defense experts that spans the ideological spectrum has come up with a plan to cut close to $1 trillion in defense spending over 10 years, and even with those cuts America’s military will remain by far the strongest and most well-funded in the world.

The Simpson-Bowles plan is being heavily backed by deficit-hawk Peter G. Peterson and a number of his foundations. His multimillion-dollar campaign includes advertising; media appearances by a corps of spokespeople; various websites, and The Fiscal Times “news” service, which seeks to insert his views into mainstream media news columns. Simpson-Bowles and the Peterson campaign mutually reinforce an ideology and set of policies that benefit the ultra-rich and corporations, not middle-class Americans.

Read related blogs on OurFuture.org:

Holding The Line On Ending The Bush Tax Cuts

Isaiah J. Poole — Mon, 03 Dec 2012 18:29:12 -0500

How to win the argument about the big economic challenges facing the American people

NUMBER 8 | December 4, 2012

Holding The Line On Ending The Bush Tax Cuts
The Challenge	The emerging Washington consensus on tax reform is that we can raise more revenue by lowering tax rates, especially on the wealthy and corporations, while “broadening the base” by limiting or eliminating tax deductions. Lowering rates, it is argued, helps growth; closing loopholes produces revenue to reduce deficits. It is a seductive proposition. But there are good reasons to resist the seduction. The argument that lower rates for corporations and the top 2 percent of taxpayers accelerate economic growth is simply not borne out by the evidence. Reviewing the post World War II history, a peer-reviewed September 2012 Congressional Research Service study concluded, “There is not conclusive evidence … to substantiate a clear relationship between the 65-year steady reduction in the top tax rates and economic growth.” Worse, previous tax reform has closed loopholes but not lobbies. The lobbies then build in new loopholes while the lower rates remain. Simplifying the tax code is a worthy and necessary goal, but tax “reform” that begins with lower top tax rates is likely to end by enriching the already rich and cutting off needed revenues.
Make the Case	We need more jobs and lower deficits. And we suffer the most extreme income inequality since the Gilded Age in the 1890s. That is because the tax cuts of the last decade encouraged a greater concentration of wealth at the top 1 percent, while doing nothing to encourage job creation that would expand the middle class. We should be asking the wealthy to pay more in taxes, so we can invest in areas vital to our economy and, as people go back to work, reduce our deficits. The richest few who’ve done well in America need to do right by America. If you follow those who say that we can get more revenue by lowering rates and closing loopholes, history shows we’ll end up with lower rates, new loopholes and less revenue — with no guarantee of greater growth. Truth is, President Bill Clinton raised top-end taxes and enjoyed record job growth. President George W. Bush cut taxes and we suffered the worst job growth of any president since the Great Depression. Americans have no problem with financial success. But they demand fairness, and continuing to give a millionaire a $150,000 tax cut while the rest of us are stuck with the bill is not fair. It is time for corporations and the wealthy to pay their fair share.
Case in Point	The first step is to put people to work doing work that needs to be done. That brings down deficits as they start earning incomes and paying taxes, not collecting unemployment insurance. We can pay for this by making certain that the richest Americans pay their fair share of taxes. Start by ending the Bush tax cuts to those making over $250,000 a year, a proposal central to President Obama’s election campaign and mandate. Then investors should pay taxes on their investment income at the same rate that the rest of us pay on our income from wages. When secretaries are paying higher rates than the billionaires that employ them, something is fundamentally wrong.
Counterpoint	When They Say: Lower tax rates create growth; closing loopholes and broadening the base will generate greater revenues. We Say: That hasn’t worked in the past, and won’t in the future. President Bush’s own Treasury Department admitted in 2006 that the Bush tax cuts would have essentially no beneficial effect on the U.S. economy at all. Look what happened after the 2001 and 2003 Bush tax cuts: the weakest economic expansion in post-World War II history. Bottom line: That’s an experiment we’ve tried and can’t afford to repeat. The Bush tax cuts cost us $2.5 trillion in their first decade, added to extreme inequality and helped put us in the hole we’re in. When They Say: We have the highest corporate tax rates in the world, and that’s hurting our ability to be competitive globally. We Say: Actually, the rate companies really pay—because of loopholes and tax havens—is one of the lowest in the industrial world. In fact, General Electric is but one of a long list of major U.S. corporations that made billions in profits and paid nothing in taxes. When They Say: We can’t raise taxes on job creators now. And most small businesses pay individual income tax rates, not corporate tax rates. We Say: Letting the Bush tax cuts expire on those earning more than $250,000 a year won’t touch more than 97 percent of small businesses. Most of those who do face higher rates are wealthy doctors, lawyers and other professionals who can afford to pay more. When They Say: We need the simplicity and fairness provided by a flat tax structure with a couple of rates and fewer deductions. We Say: Getting rid of overseas tax dodges, glaring loopholes and unfair tax breaks is a good idea. But we can have simplicity and still insist that the wealthiest Americans pay their fair share of taxes.
Public Pulse	In a post-election poll, 56 percent of respondents said “the best way for Congress to deal with the Bush tax cuts” is to end them for those making $250,000 or more a year. (Hart Research for Americans for Tax Fairness) In an Election Day exit poll, 60 percent of respondents supported raising taxes on those earning more than $250,000 a year, while 35 percent supported not raising taxes on anyone. (CNN) Seventy percent say that raising taxes on the richest 2 percent while keeping taxes low for low- and middle-income people was an “acceptable” way to deal with the budget deficit, and 68 percent say not raising taxes on the rich was “unacceptable.” (Democracy Corps poll for Campaign for America’s Future, November 2012) Fifty-one percent (42 percent strongly) support the view that “any new plan to address the deficit should start by closing corporate loopholes and raising taxes for those at the top” and not cut Medicare, Medicaid and Social Security. (Democracy Corps poll for Campaign for America’s Future, November 2012) Substantial majorities (84 percent) support reforms that would ensure that corporations paid the same tax on their foreign profits as they do on their U.S. profits. (Hart Research for Americans for Tax Fairness) Only 26 percent of respondents in a national survey said they believed the wealthy paid their fair share of taxes. (Pew Research Center). In a poll of 2012 general election voters, 62 percent said one message they were trying to send with their vote was that “we should make sure the wealthy start paying their fair share of taxes.” (Hart Research/AFL-CIO, November 2012)
Hot Facts	The top tax rate an hourly worker pays is 35 percent, while the top tax rate on the income made by a Wall Street stock trader or hedge fund manager is just 15 percent. That’s why Mitt Romney paid a 14 percent tax rate on income of over $20 million a year. If we taxed investment profits at the same rates we tax workers’ wages, that would make more than $500 billion available over the next decade for critical national needs or to reduce the deficit. (Citizens for Tax Justice). Giving tax breaks to the wealthy is among the least effective ways to create jobs. But, if we extend the middle-class portion of the Bush tax cuts for 98 percent of Americans and adjust the Alternative Minimum Tax so it doesn't affect middle-class households, that will create 1.6 million jobs, according to the nonpartisan Congressional Budget Office, and boost economic growth by 1.3 percentage points. (Congressional Budget Office) For every dollar Warren Buffett earns, he pays about 17 cents in taxes, while the people who work in his office pay on average more than twice that—36 cents of every dollar. (New York Times) Under our current tax laws, nearly 1,500 millionaires and some of the nation’s largest corporations get away with paying no income tax at all. (Americans for Tax Fairness, Citizens for Tax Justice) Ending the Bush tax cuts for the richest 2 percent would affect on average only two out of 100 people in each state. (Americans for Tax Fairness)
Tweet This	No compromise on ending Bush tax cuts for the top 2 percent #smarttalk via @OurFuture Obama, we have your back. Majority wants end to Bush tax cuts and invest in jobs #smarttalk via @OurFuture
Learn More	Tax Facts, Americans for Tax Fairness Tax Justice Digest, Citizens for Tax Justice “Recent Studies Find Raising Taxes on High-Income Households Would Not Harm the Economy,” Center for Budget and Policy Priorities “Navigating the Fiscal Obstacle Course,” Economic Policy Institute
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The Fiscal Showdown: Just Say No to Economic Extortion

Isaiah J. Poole — Tue, 27 Nov 2012 12:53:31 -0500

How to win the argument about the big economic challenges facing the American people

NUMBER 7 | November 27, 2012

The Fiscal Showdown: Just Say No to Economic Extortion
The Challenge	This economy isn’t working for most Americans. The faltering recovery has begun creating jobs and lowering deficits, but more than 20 million are in need of full-time work. Those finding jobs struggle with lower wages and less security. The richest 1 percent is capturing virtually all of the nation’s income growth, while the middle class is getting crushed. We need to fix the economy so it works for working people. Instead Washington is focused not on jobs and growth, but on an extortionist threat concocted by the Tea Party-dominated Republican Congress. Cut the benefits in vital family security programs – Social Security, Medicare and Medicaid – 10 years from now, they threaten, or they’ll blow up the recovery next year with an “austerity bomb,” a mix of tax hikes and across-the-board spending cuts that will throw people out of work and the economy into recession.
	This dangerous extortion is no way to make sensible policy. You can’t make sensible reforms with a gun at your head. You can’t “fix the debt” 10 years from now without fixing the economy so that it is generating good jobs again. And cutting Social Security, Medicare, and Medicaid has nothing to do with that imperative. We need to build a new foundation for growth that will generate good jobs again. Invest in areas vital to our future – a modern, efficient infrastructure, education from pre-school to college, research and innovation. Change our ruinous corporate trade policies that reward companies for shipping jobs abroad, and challenge nations like China that trample the rules. Lift the minimum wage and empower workers to gain a fair share of the profits they help to produce. Growth has already reduced our annual deficits by 25 percent since 2009 in relation to the size of our economy. Putting more people back to work should be the priority. The Congress should just say no to extortion. Extend the middle-class tax cuts, the payroll tax cut and extended unemployment insurance, while ending the tax breaks for the richest Americans. Use that money and resources saved from ending the war in Afghanistan to make the investments vital to rebuilding the country and putting people back to work. Say no to benefit cuts in Social Security and Medicaid, while continuing to work on reforming our broken health care system. Cut waste and abuse, not programs vital to infants, children and the vulnerable. We can get our books in order with reforms that are essential to making the economy work. No economy will generate good jobs if the wealthiest 1 percent is capturing 90 percent of the income growth, so raise taxes on the rich, tax investors the same rate as workers, and shut down corporate tax havens. We can’t afford investments we need if entrenched corporate lobbies prey on the budget, so focus cuts on the subsidies and tax breaks afforded big oil; the drug companies; agribusiness; and the astounding waste, fraud and abuse of military contractors. We can’t allow Wall Street speculation to blow up the economy again, so levy a speculation tax on Wall Street to slow computerized gambling. Cutting benefits of Social Security, Medicare and Medicaid will only burden working people and weaken the economy.
Make the Case	Don’t get snookered. We don’t face a natural peril like a “cliff”; we face political extortion. Backed by a multimillion dollar campaign funded by Wall Street billionaire Pete Peterson and corporate CEOs, conservatives in Washington are threatening to blow up the recovery unless Congress agrees to cut benefits in Medicare, Medicaid and Social Security, starting a decade from now. Don’t fall for it. Cuts in Medicare, Medicaid and Social Security will neither put people to work nor reduce our current deficits. Stop the extortion and focus on generating good jobs and getting the economy on track. Extend the tax cuts for 98 percent of Americans, while ending them for the wealthiest Americans. Use that money to help pay for investments vital to our future – rebuilding our infrastructure, investing in education from pre-K to college – that will also put people to work. End the threat of across-the-board spending cuts, stop picking on the vulnerable and get our books in order by taking on the entrenched interests that are robbing us blind. The subsidies to big oil. The giveaways to the drug companies. The tax havens that let companies like GE earn billions in profits and pay no taxes at all. The only way they can pull off this extortion scheme is to scare the devil out of everyone. Tell them: This time, we’re not going to fall for it.
Case in Point	The Threat is Political Extortion, not Natural Peril What we face isn’t a fiscal cliff; it’s political extortion. A series of agreements exacted by Tea Party Republicans would trigger automatic spending cuts plus the expiration of the Bush tax cuts, extended unemployment insurance and the payroll tax cut at the end of this year. This austerity potion threatens to poison the recovery over the next year, leading to rising layoffs and spreading misery. Congress can and should decide simply not to drink the poison. Instead, there are politicians in both parties who want to use the threat to extort benefit cuts in Social Security, Medicare and Medicaid that would otherwise be unacceptable#. Don’t fall for it. This isn’t about reducing current deficits. As the economy recovers and people go back to work, our annual deficits are already falling, down 25% as percentage of the economy since 2009. And the cuts in Social Security and Medicare they want won’t kick in for a decade. They are fanning short-term hysteria over deficits to attack programs they have opposed from their beginning. Good Jobs First With 20 million people in need of full-time work, the wealthiest 1 percent capturing more than 90 percent of the income growth, and the middle class getting crushed, we need to focus on generating good jobs first. Putting people back to work will speed the recovery and is the first and necessary step to reducing our deficits. The worst thing we can do – as we’ve seen from Europe – is to inflict mindless spending cuts that cripple the recovery. That will increase misery and increase our debt burden. No Benefit Cuts to Social Security, Medicare, and Medicaid Cutting these vital building blocks of family security will neither help the economy nor reduce our current deficits. We don’t have an entitlements problem. Our long-term projected deficits are entirely the result of our broken health care system. To solve that we need to continue reforms, taking on the insurance companies, drug companies and health complexes that drive up prices. If we were spending at the rate other industrial countries do, we’d project surpluses as far as the eye can see. Curb the Powerful, Not the Vulnerable We need to fix our economy so it works for working people – and that is the only way to fix our long-term debt. To do that we have to take on the powerful, not the vulnerable. It isn’t seniors, the disabled, the ill or the dying that are destabilizing our economy and causing deficits. It’s Wall Street that blew up the economy and doubled the debt burden. It’s multinationals shipping jobs abroad that have racked up ruinous foreign trade deficits. It’s millionaires and billionaires paying lower tax rates than the cops that patrol their streets that make vital investments impossible. It’s a Pentagon spending almost as much as the rest of the world’s military budgets combined that is the biggest source of waste, fraud and abuse in the federal government. It’s the drug and insurance companies that drive up our health care costs. Make that the measure of any deal. Does it start by raising tax rates on the wealthy and closing down corporate tax dodges? Does it start by cutting subsidies to powerful interests? If not, if it starts by cutting programs for poor children or benefits in family security, then just say no. It is only adding to our problems, not subtracting from them. Listen to Investors, Not Hysterics The hysterics say America’s deficits are about to destroy us. Investors treat America as a safe harbor for their money. Interest rates on U.S. Treasury notes are near record lows. With a decrepit and outmoded infrastructure that must be rebuilt, a construction industry that is flat on its back, and record low interest rates, we will never have a better opportunity to launch a major initiative to rebuild America. That will generate jobs now, make our economy more competitive and our lives safer. No business leader with a brain would pass up an opportunity like this.
Public Pulse	The common sense of Americans across the political spectrum gets this right. Overwhelming majorities of Americans want an agreement that: Raises taxes on the rich and the corporations Protects Social Security and Medicare Protects programs for education, children and infants Cuts subsidies to drug companies, oil companies, and agribusiness Ends the war in Afghanistan and uses the money saved to reduce the deficit Polls you can use to buttress this argument include: The Real Mandate (CAF/Democracy Corps; November 8, 2012) Engaging the Big Economic Issues Ahead (Roosevelt Institute/Democracy Corps; November 16, 2012) Americans for Tax Fairness Post Election Poll (Hart Research) Low Marks for the 2012 Election (Pew Research Center)
Tweet This	Say no to extortion and to cuts to Social Security, Medicare, Medicaid #fiscalcliff http://t.co/avo5FBHn via @OurFuture #GrandBargain that protects the rich at the expense of the vulnerable is a grand betrayal http://t.co/avo5FBHn via @OurFuture Want to #FixtheDebt? Fix our economy so it works for working people. See how: http://t.co/avo5FBHn via @OurFuture Resources to have a #Smarttalk on deficits, spending and jobs http://t.co/zQG7qUWV #p2
Learn More	“A 'Grand Bargain' on the Fiscal Cliff Could Be a Grand Betrayal,” Robert Borosage, The Nation. “To the President and the Congress,” advertisement endorsed by 29 leaders, The Washington Post, November 8, 2012. “Jobs and Growth, Not Austerity,” statement signed by 350 economists and economic experts, Institute for America's Future, November 2012. "Politics Is at the Root of the Problem," Joseph Stiglitz, The European “It's Simple: Cutting the Deficit Will Kill Jobs and Hurt Growth; Taxing the Rich Won't,” Robert Reich, AlterNet “U.S. Deficit Shrinking At Fastest Pace Since WWII, Before Fiscal Cliff,” Jed Graham, Investor’s Business Daily, November 20, 2012

Making Sense on China, Trade and Jobs

Isaiah J. Poole — Tue, 23 Oct 2012 23:27:22 -0400

How to win the argument about the big economic challenges facing the American people

Number 5 | October 24, 2012

Making Sense On China, Trade and Jobs

The Challenge	American companies continue to ship good jobs to China. They seek to profit from underpaid, overworked labor with few rights. They profit from Chinese subsidies and lax environmental policies. They want access to China’s market, even at the price of forced partnerships, stolen technologies and tilted playing fields. Our $295 billion trade deficit in goods with China in 2011 was the largest-ever such imbalance between two nations. It is a staggering three-fourth of the U.S. non-oil trade deficit. And it is as much a jobs deficit as it is a trade deficit. International Monetary Fund economists have declared that severe trade imbalances contributed directly to the economic collapse. And now the China deficit weakens our recovery. In the years since China’s entry into the World Trade Organization in 2001 we lost more than 50,000 factories and 5 million manufacturing jobs without filing a single trade complaint. Even worse, we have lost entire industries and vital industrial ecosystems, taking down entire regions of our country. And the threat of companies leaving has put downward pressure on wages here, as workers are frightened that they will lose their jobs if they assert their rights. The reason for the imbalance is that China pursues mercantilist policies. The Chinese government controls access to its internal markets; steals technology; manipulates its currency to keep the prices of its exports artificially low; holds down the cost of fuel and electricity; provides free land and utilities to companies in key economic sectors; limits competition by regulating distribution of products; subsidizes Chinese-owned companies and industries, and utilizes many other methods of promoting its export industries at the expense of those who play by the rules. But China isn’t simply taking jobs from us. U.S. corporations are shipping our jobs to them, seeking out low-wage workers, subsidies, and minimal workplace and environmental regulation. And worse, they can write off the expenses of doing so from their taxes as a cost of doing business. And while China’s government has a national trade and industrial strategy, U.S. trade strategy is written by multinationals, serving their interests and not the interests of the American people.
Make the Case	It’s time to see “Made in America” once more. We’re running a trade deficit of well over $1 billion a day. We can’t continue to let countries like China rig their currency, target our industries and drive us into a race to the bottom. We do need more trade, but it must be balanced trade. We have to put companies on notice: If you want to sell in America, you need to produce in America. And we need to put countries like China on notice: We will treat your exports to this country in the same way you treat our exports to your country. It's time to enforce the rules – and to change the rules that rig the game. Let’s stop negotiating more treaties modeled after NAFTA (North American Free Trade Agreement), which opened the U.S. floodgates to cheap imports and encouraged corporations to export jobs to low-wage countries, and start balancing our trade. And let’s create a manufacturing strategy for this country to rebuild manufacturing right here at home.
Case in Point	Don’t buy the myth that more trade treaties create more jobs. NAFTA-style trade treaties aren’t free trade accords. They are complicated agreements negotiated with corporations, designed to protect their investments abroad as much as exports abroad. Our trade policies are dominated by American multinationals that profit from shipping jobs abroad to low-wage markets. The old-style trade accords have cost us jobs and run up our foreign debts. “Made in America” needs to be more than a slogan or a fading wish. We need a national manufacturing strategy, as every other country has, that targets strategic industries, invests in research and development, builds world-class competitive infrastructure, and enforces balanced trading relations. "China cheats" resonates with voters because it is true. They sell much more to us than we sell to them. That is not “trade”; that is a one-way relationship that is draining our economy. China is guilty of repeated trade violations and they regularly lose trade cases brought not only by the United States but also by other nations and the European Union. When we fix the trade problems with China (and other countries) our economy will be better off, we will have more and better-paying jobs, and key industries will again prosper. And if China begins to seek greater growth at home, millions of Chinese will be better off as well! To fix this we need to act against currency manipulation and trade violations like government subsidies and blocking our products from sale over there. But the problem isn’t just China. The problem is that U.S. trade policy is dominated by multinationals that have a different interest from the American people and American workers. They can profit from moving good jobs abroad, even as Americans pay the price in lost jobs and declining wages. We won’t have a trade policy that makes sense for America until we clean out Washington and curb the influence of big money and entrenched corporate lobbies.
Counterpoint	When they say: Aren’t you risking a trade war if you take on China’s cheating? You can say: We are already in a trade war and China is winning. We can fix trade with China and both sides will be better off. When they say: What happens if China retaliates and won't buy our bonds? You can say: We are China’s largest customer. If China stopped buying our bonds it would bring down their economy. Also, that would force the value of the dollar down, which would help make U.S. exports more competitive. When they say: We benefit from cheaper goods made in China. You can say: The cost of those cheaper goods is closed American factories, lost jobs and stagnant wages for most of us who still have jobs. It also means sacrificing our ability to make a living in the future. If we keep going down this path, the U.S. will no longer be the leading source of innovation and new technology. When they say: Aren’t you just advocating “protectionism?” You can say: We need a trade policy that works for working people. We can’t let global corporations drive a race to the bottom that undermines working families here and abroad. We need a strategy that defends core labor standards at home and abroad. We need a national strategy to counter the strategies of mercantilist nations and unaccountable multinationals. When they say: Isn’t a national strategy just picking winners and losers? You can say: No, this isn’t about picking individual companies to win and lose. It is about creating a strategy to insure that the U.S. captures a lead in the markets of the future – from clean energy to biotechnology.
The Public Pulse	Americans know our trade deficit with China is important. In a September Pew Research Center poll comparing public concerns with those of “experts”: 78 percent of the public considers the amount of debt held by China to be serious vs. 20 percent of government experts, 42 percent of business/trade experts and 53 percent of news media experts. 71 percent of the public sees loss of jobs to China as a serious concern vs. 22 percent of government experts, 15 percent of business/trade experts and 22 percent of news media experts. And 61 percent of the public sees the trade deficit with China as a serious concern vs. 33 percent of government experts, 36 percent of business/trade experts and 31 percent of news media experts. The public wants policies that stand up for America. A July poll conducted for the Alliance for American Manufacturing found that: Overwhelming majorities of Republican (87 percent), Democratic (91 percent), and independent (87 percent) voters were in favor of strong Buy American provisions for public works projects. More than two-thirds said that China’s trade violations were costing the U.S. jobs, and 62 percent wants Washington to get tougher on China’s cheating. 83 percent had an unfavorable view of companies that outsource jobs to China while voters maintain extremely favorable views of goods manufactured in the U.S. (97 percent favorable). 62 percent of voters favor a “get tough” approach with China, as opposed to only 29 percent who say we should be careful not to “start a trade war.” When asked if China’s cheating on trade agreements had cost American jobs, helped create U.S. jobs, or had no effect: 68 percent said it cost jobs, 10 percent said no effect, 2 percent said had created jobs. When asked about enforcing trade laws to support a level playing field, 91 percent of voters were in favor.
Hot Facts	The trade deficit with China cost more than 2.7 million American jobs between 2001 and 2011. Our $295 billion deficit in goods trade with China in 2011 was the largest-ever such imbalance between two nations in the history of the world, and it is on pace to exceed $300 billion this year. It is as much a jobs deficit as it is a trade deficit. From January 2000 to December 2011, the U.S. lost almost 5.5 million manufacturing jobs (from 17,292,000 to 11,808,000), according to the Bureau of Labor Statistics. China has accumulated almost $1.5 trillion from the trade imbalance.
How To Say It	America has been falling behind, while countries like China have a vision to succeed. We need our own vision for American success. We need a clear strategy to make things in America, make our economy competitive and revive America's middle class. It's time to challenge countries like China that are taking our jobs, end subsidies to corporations that send jobs abroad, stop passing NAFTA-like trade deals until we have a national strategy for making things in America and exporting goods, not jobs.
Avoid	Being against China just because they are “foreign.” This is not the source of the problem with trade with China. Sounding like you are against trade itself. If set up correctly, a good trading relationship with China will benefit us as much as it benefits them, and we want that.
Tweet This	Tell Congress to vote on Currency Manipulation Bill to bring back jobs. Boehner holding it up. #smarttalk via @OurFuture Renegotiate bad NAFTA-style trade agreements that kill jobs and industries! #smarttalk via @OurFuture Stop China cheating! Enforcing trade agreements will bring jobs home. #smarttalk via @OurFuture
Learn More	On OurFuture.org: "Make It In America" issue page U.S.-China trade page Other trade-related posts Alliance for American Manufacturing: Trade with China Currency manipulation China’s business subsidies Public Citizen's Global Trade Watch Coalition for a Prosperous America Trade Reform

Smart Talk About Prosperity Economics

Isaiah J. Poole — Mon, 17 Sep 2012 17:33:50 -0400

How to win the argument about the big economic challenges facing the American people

NUMBER 1 | SEPTEMBER 17, 2012

A New Strategy For Prosperity

This edition of Smart Talk, "A New Strategy for Prosperity," is based on a 60-page paper by Yale political scientists Jacob S. Hacker and Nate Loewentheil called “Prosperity Economics” that lays out a broad reform agenda. Institute for America's Future co-director Roger Hickey worked with the authors to distill the argument here.

The Challenge

Americans face a stark choice for our economy in the upcoming election, an election that will unfold in the midst of a historically slow recovery from a devastating economic recession.

One strategy would have us double down on the policies that pushed us into recession and have slowed our recovery. This strategy would further enrich the very wealthy, undermine the middle class and restore the financial free-for-all that failed us so badly.

The other choice – the choice we endorse – is a strategy that makes investments in our future as a country, supports working Americans and encourages broadly shared growth. In this strategy, we fix our politics and our economy so they work for the middle class, not narrow economic interests. In this strategy, we are guided by the practical lessons of our history and the growing amount of research that shows deregulation and tax cuts can’t build long-term prosperity.

It is a choice, in other words, between austerity economics and prosperity economics. It is a choice we have to make individually and as a country – which is why we hope you’ll join our movement and sign our petition to support Prosperity For All.

The stakes could not be higher. Nearly 24 million Americans are unemployed, underemployed or have dropped out of the job market altogether. The jobs crisis is aggravating the long-term decline of the American middle class. Over the last thirty years, the historical connection between wages and productivity has broken. The economy has grown, but most Americans have seen little of the benefit. Instead, the gains have gone disproportionately to the top 1 percent, and especially the top slices of the top 1 percent on Wall Street and in corporate boardrooms.

We therefore join together to demand a new direction. The long-term health of our country depends on economic growth, individual and social security and a strong democracy. Our agenda calls for strengthening each of the three pillars of prosperity.

The Solution

Growth: We call for immediate spending on infrastructure to create jobs and lay the foundations for future growth and for federal grants to the states to put teachers, firemen and other public servants back to work. We seek expanded support for students to ensure that every qualified student can attend and graduate from college. We call for major investments in scientific research and development, especially in the area of clean energy, to encourage increased economic innovation. We seek new monetary and trade policies that support our manufacturing base and encourage job creation, not outsourcing; and we call for strengthening the rights of workers to bargain collectively to ensure they share in the gains their labor produces.

Security: We call for strengthening, not cutting Social Security – and reject plans to slash Medicaid or turn Medicare into a voucher. We call for building on the Affordable Care Act by putting in place a public option. We seek to guarantee long-term economic stability by putting a price on carbon and stewarding our natural resources. And we press for real progressive tax reform that will help reverse inequality, put our government on solid fiscal footing and cut unhealthy subsidies for industries, such as big oil, that harm our environment and our society.

Democracy: We reject the idea that corporations are persons with the right to unlimited spending to dominate our politics. We call for reining in political and lobbying expenditures, for public financing of campaigns, and for actions that would strengthen civil society and help citizen organizations hold government accountable. We must empower shareholders to police corporate behavior and executive pay, and empower workers to form unions and collectively bargain to serve as a check on the power of corporate actors. We call for filibuster reform. And we insist on the removal of all barriers that stand between citizens and their right to vote.

Today, the misguided mindset of austerity economics dominates debate in Washington, D.C. That’s why we can no longer wait for our elected officials to take the lead. Decisions made in the next few years will have profound consequences for Americans and the American economy for decades to come. It is time to make the changes that will create prosperity for all.

Learn More

» Read the full 60-page "Prosperity Economics" paper by Jacob Hacker and Nate Loewentheil on the Prosperity for America website.

» Visit Smart Talk on the Web at OurFuture.org/smarttalk

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Make The Case for Progressive Tax Reform

Why Social Security Recipients Shouldn't Be Shackled With The Chained CPI

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The Next Austerity Disaster

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Holding the Economy Hostage

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Why We Reject The Simpson-Bowles Deficit Reduction Plan

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Making Sense on China, Trade and Jobs

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Smart Talk About Prosperity Economics