Principles for the Debate on the Budget and the Economy

End SequestrationProtect Social Security and Health CareDefend the Safety NetClose Corporate Tax Loopholes

September 26, 2013

Dear Member of Congress:

As we head into another series of manufactured budget crises, the 41 undersigned organizations stand against those who want to hold our economy hostage in order to dictate the terms of debate. We urge you to:

End Job-Killing Sequestration Cuts

The greatest challenge facing our economy today is the continuing jobs crisis, not the deficit. Over 20 million people are in need of full-time work. Meanwhile, the annual deficit has been cut by more than half since 2009 as a portion of the economy, and is now falling faster than at any time since the demobilization after World War II.

The across-the-board budget cuts – called “sequestration” – that began in March of this year are making the jobs crisis worse and holding back economic growth. According to the Congressional Budget Office, simply repealing sequestration would generate 900,000 jobs. We call on Congress to end the sequester – period – and not replace it with other harmful cuts.

We reject threats by some extremists to shut down the government or cause a government default unless their ransom demands are met – including their demand to defund or delay the Affordable Care Act (ACA). Congress should lift the debt ceiling without conditions because the full faith and credit of the U.S. government is not – and should not be – negotiable.

Today’s job crisis is severe. We need well over 8 million jobs to bring employment back to where it was before the 2008 recession hit, according to the Economic Policy Institute. At the rate we’re going, it will take at least eight years to close that gap. Five years into “recovery,” there are still on average three job-seekers for every job opening. In some job categories, the ratio of job-seekers to jobs is as high as 10 to one. We still have more than 4 million people who have been looking for work for more than six months but can’t find work.
The sequester made our job crisis worse. It showed economic growth by at least 1 percent and is already costing us jobs – 750,000 by the end of the year and 1.6 million by the end of 2014, according to the Congressional Budget Office. There are 300,000 fewer people employed in federal, state and local public sector jobs than there were at the start of 2011.
The sequester is also hurting vital services. 140,000 households are going homeless due to cuts in Section 8 and other housing programs; 70,000 children are being kicked out of Head Start programs; 600,000 mothers and children are losing food aid through the Women, Infants and Children (WIC) program; tens of thousands of seniors have been dropped from Meals on Wheels programs that have been forced to cut the number of meals they serve by at least 4 million. Then there are the negative effects on everything from live-saving medical research to law enforcement – effects that in many cases cancel out significant amounts of sequester “savings.”
Meanwhile, there is no short-term debt crisis. The federal deficit for fiscal 2013 is expected to end up at less than $750 billion. That’s 42 percent lower than the deficit for fiscal year 2011. Federal non-security discretionary spending as a percentage of the economy is as low today than it was in the Eisenhower administration. Deficits will remain a manageable 4 percent of gross domestic product for the next 10 years, down from almost 9 percent two years ago.

Protect Medicare, Medicaid, and Social Security

We urge you to oppose any cuts in Social Security, Medicaid, or Medicare benefits, including the shifting of health care costs to beneficiaries. We should be improving Social Security, Medicaid, and Medicare by expanding benefits, not cutting them, because working people need more economic security, not less.

We need to strengthen Social Security, not cut it. With pensions disappearing, 401(k)s failing to provide the secure retirement income that pensions once did and interest rates on savings at record lows, the last thing we should do is cut the one lifeline that ensures senior citizens have the basics they need for survival. Two out of three seniors count on Social Security for more than half of their income, and their average check is $1,270 – not enough to get a two-person household above the poverty line.
– And we can. Even without action, Social Security in 2013 has sufficient funds to pay for all monthly benefits in full and on time for the next 20 years – without contributing one dime to the federal deficit. We can make that true for the next 75 years or more by requiring high-wage earners pay into Social Security at the same rate as people who make less than $100,000 a year. Fixing the economy so that more people are working at a living wage also would go a long way toward securing Social Security for the long term.
Medicare helps rein in out-of-control health costs. Cutting Medicare raises costs. The Congressional Budget Office estimates that a private health insurance plan providing the same basic Medicare benefit would currently be 11 percent more expensive than traditional Medicare. Cutting Medicare by raising the eligibility age to 67 would mean higher costs to older workers, employers and governments at all levels that would far outweigh the $148 billion in “savings” over 10 years assumed by such a policy change.
Cutting Medicaid spending would have disastrous consequences that would affect the entire health care system. Plans to shrink Medicaid would put some needed health care services out of reach for millions of financially struggling households. It would also push states to decrease payments to hospitals, doctors, home health agencies, and other health care providers. That would weaken America’s health care infrastructure, making it unable to serve the whole population, and would drive up costs elsewhere in the health care system. Medicaid is an extraordinarily efficient federal program: 96 percent of its funding goes directly to delivering health care. Medicaid spending reductions would not cut “fat”; they would cut essential services that make out health care system more equitable and cost-efficient.

Defend Core Programs for Those Most At Risk

Congress should defend the core security programs for those most at risk in this economy, such as impoverished women and children, the elderly, or the long-term unemployed. The savage cuts proposed for food stamps (SNAP, the Supplemental Nutrition Program) are unconscionable. Cuts now projected in education, housing, home heating, Head Start, infant nutrition and other programs vital to low-income families should be reversed.

We should be focusing on growing the economy, not cutting lifelines out of poverty. Government support programs like nutrition assistance have lifted 40 million Americans out of poverty. Still, almost two in seven Americans remain in poverty; of the children in that group, seven out of 10 are from working families. Eight out of 10 people in the SNAP program have worked in the year before or the year after receiving benefits, meaning that the true face of the SNAP or food stamp recipient is the parent working at a low-wage job, not a “freeloader” refusing to work. The best way to reduce benefits, and lower the 18 percent of Americans who report experiencing “food insecurity,” is to use federal resources to help create jobs and make work pay through an increase in the minimum wage.
The Affordable Care Act is working. Let’s defend it, not defund it. Thanks to “Obamacare,” the number of uninsured people is already dropping and millions of Americans will have access to health care with lower premiums. People with pre-existing conditions won’t be frozen out of the market; and fewer households will find themselves bankrupted by catastrophic illnesses. Businesses have more options for offering health care to their employees. Congress and the White House should be working together to build on these and other benefits. Instead, hard-core conservatives are willing to throw all this away, and put the nation’s economy at risk, in a quixotic attempt to “defund Obamacare.”

Eliminate All Tax Incentives for Sending Jobs Overseas

Powerful corporations and the rich should pay their fair share of taxes. As a start, we call on Congress to eliminate all tax incentives that encourage companies to ship jobs abroad. Ending these tax subsidies would – by itself – increase investment and employment in the U.S. At the same time, it would generate hundreds of billions in revenue which could help rebuild our economy without increasing the deficit.

This money could be used to launch a five-year plan to rebuild our outmoded infrastructure; to help ensure that the U.S. captures the lead in a green industrial revolution that is already generating growing numbers of good jobs; and to invest in education, from preschool to affordable college, to prepare our children to succeed in the 21st century. Congress should combine this with raising the minimum wage and reviving the right to organize to counter the extreme inequality so debilitating to our economy.

Corporations that have done well in America should do right by America. The tax code today still allows businesses to deduct from their taxes expenses they incur when they fire American workers and move business operations to a foreign country. When Senate Democrats tried to eliminate that deduction, Senate Republicans blocked the measure. That’s on top of the ways the tax code allows businesses to funnel profits earned in the U.S. through overseas subsidiaries to avoid taxation. Eighty-three of the 100 U.S. corporations have such overseas tax havens. No wonder many of the Fortune 500 corporations pay on average an 18.5 percent effective tax rate, with 30 of the Fortune 500 paying a tax rate of less than zero – they actually got money from taxpayers.

We should have a tax code in which corporations pay their fair share – so that we as a country can continue to invest in the fundamentals that allow American workers and businesses to succeed – and are rewarded for adding American jobs, not those that take them away.

Sincerely,

AFL-CIO
AIDS United
American Federation of State, County and Municipal Employees (AFSCME)
American Federation of Teachers
Campaign for America’s Future
Caring Across Generations
Center for Community Change
Center for Effective Government
Coalition on Human Needs
Communications Workers of America
Community Action Partnership
Council for Opportunity in Education
CourageCampaign.org
Disability Rights Education & Defense Fund
Fair Share
Gamaliel
Green For All
Health Care for America Now
International Union, United Automobile, Aerospace & Agricultural Implement Workers of America (UAW)
Jobs with Justice/American Rights at Work
Leadership Center for the Common Good
The Leadership Conference on Civil and Human Rights
MoveOn.org Civic Action
NAACP
National Coalition for the Homeless
National Committee to Preserve Social Security and Medicare
National Employment Law Project
National Fair Housing Alliance
National Immigration Law Center
National People’s Action
National Women’s Law Center
NETWORK, A National Catholic Social Justice Lobby
Partnership for Working Families
PolicyLink
Racial and Ethnic Health Disparities Coalition
Service Employees International Union (SEIU)
Social Security Works
United Steelworkers (USW)
USAction
Wider Opportunities for Women
Working America