The Fiscal High Road

In response towards the President’s address on the federal spending budget, Demos’ Heather McGhee calls for a bolder commitment to recovery: “Today, the President with the United States laid out his vision for restoring fiscal responsibility in a way that does not impede our fledgling recovery or violate the core intergenerational promises made throughout the American Century. Demos applauds the President’s leadership. Initial, the positives. The President reaffirmed his commitment to the kind of public investment that made America great, such as education, infrastructure, and encouraging innovations in power and science. He also recognized that we can no longer justify a defense spending budget that has contributed to two out of each and every 3 dollars in elevated discretionary spending because 2001. He addressed one of the real drivers of long-term debt – health care expenses – by targeting the source of cost increases, instead of merely targeting the government or individual payers of these increases, as the Ryan plan does. His courageous method – strengthening the hard money lenders Independent Payment Advisory Board and permitting more generics competition and government bargaining – directly challenges the insurance and drug lobby who hold far an excessive amount of sway in Washington. The President also offered a powerful counter towards the worst components with the conservative budget orthodoxy. He either explicitly or implicitly rejected the most economically damaging proposals, including: continuation of the Bush tax slashing ideology that brought us a job-growth-free decade; an 18 percent GDP spending cap that would guarantee our international decline; and privatization and block granting of Medicare and Medicaid. Sadly, the President has retreated from the urgency of joblessness. He resisted proposals that would send us back into Recession, yes, but exactly where will be the plan to put 29 million under- and unemployed Americans back to work? He rejected the right-wing war against the American government, yes, but when will the wage war against financial inequality and middle-class decline, for which government will microdermabrasion machines be the most powerful weapon? With federal tax receipts at the lowest share of the economy in 3 generations – and corporate taxes at a record low, any legitimate deficit strategy should raise considerable income. The President doesn’t seem to have that intention. His strategy embraces exactly the same fundamental bad math with the Bowles-Simpson strategy: $3 in spending cuts for each and every $1 in extra tax income. Thankfully, the inclusion of interest payments with spending will offer much more balance than the economically unsound Bowles-Simpson approach. Nevertheless, we must admit that we have a revenue issue, and will in fact require more spending to rebuild a middle-class economy. We simply can’t energy a 21st century, high-speed rail economy on a 20th century steam engine tax base. Let us be clear: the conservative fiscal vision is austerity for the vast majority of Americans and publicly-financed charity for narrow elite. This can’t stand, and the President produced that clear. You will find some methods that policymakers can enhance on the powerful foundation the President has set. Look Beyond the Bush Tax Cuts. Given our record inequality and urgent national requirements, why ought to we stop at merely reversing the Bush tax cuts on the highest income bracket, a group that’s diverse in and of itself? The President ought to ask that those that benefit most in our society contribute a metal detector lot more to its survival. New, higher tax brackets ought to be created for millionaires, billionaires and wealthy heirs, along the lines of Rep. Schakowsky’s Fairness in Taxation Act. “Corporate Citizens” Ought to Pay Like Citizens. The President reiterated his call to close corporate tax loopholes, but without raising much more revenue, echoing the business lobby’s false complaint about the statutory rate’s effect on economic competitiveness. The truth is, corporations now account for just 9 percent of federal tax income (down from 27 percent in 1955) and contribute a percentage of taxes to our GDP that is lower than all other industrialized nations. Corporate tax reform must ask for much more video camera stabilizer from American business. Commit to Retirement Security. With employers failing to offer sufficient private pensions, Social Security benefits will require to be higher for many future retirees to sustain today’s living standards. Young workers may be relieved that their advantages won’t be “slashed” within the President’s vision, but without major reform of our private retirement system, any decrease is unacceptable (and unnecessary, as greater payroll taxes could fund sustained benefit levels). In other, less-reported news, the Congressional Progressive Caucus unanimously voted yesterday to release its own alternative budget. The CPC’s fiscal plan delivers a bolder, more coherent vision of what’s broken within the economy, which broke it, and how to fix it.” Demos will publish a scorecard that rates the major tankless water heaters budget and deficit reduction plans on key criteria. For much more info or to speak to an expert, see get in touch with information above. Demos’ Taxes Matter Week will also address these problems and much more. All through the week, we’re publishing expert analysis and inventive info graphics to raise awareness about how and why taxes are a vital source of income and make sure America’s good results.