A $700 Billion Dilemma

How would you spend $700 billion? Congress has to decide this month.

One simple solution would be for Congress to extend the Bush-era tax cuts for households with incomes over $250,000 for another decade. That would use up all $700 billion.

I feel bad for Congress. Lawmakers are under a lot of pressure to extend these tax cuts by New Year’s Eve when they expire. Of course, it’s similar to my teenage daughter who spent all weekend goofing off and was up late on Sunday night doing her homework. She’s feeling pressure, too.

Crocodile TearsCongress must decide by year’s end whether to give these high-income households an extravagant holiday package. These are the same fortunate people who gave Congress those memorable campaign contributions in September and October. Members of Congress, at least those who won their re-election campaigns, may be feeling generous.

On the other hand, opinion polls show that the U.S. public strongly supports letting the tax cuts for high-income households expire. We’ve got a list of other priorities, such as fixing our infrastructure, reducing our energy bills, and reducing the deficit.

Congress has been putting off this decision all year. But if lawmakers are mindful of America’s best interests, it shouldn’t take long to make their decisions.

It’s the choice between putting “chicken in every pot” or putting a Bentley in every Wall Street banker’s garage by extending tax cuts for the richest Americans.

Congress could extend tax cuts for the wealthy so that every affluent U.S. teenager could receive free Justin Beiber tickets once a year for life. Or lawmakers could extend unemployment insurance at a time when every available job has five applicants.

We need a combination of paying down the debt and making strategic investments that will strengthen our economy. Borrowing during hard times and making smart investments could boost future productivity and create good jobs in the process.

Such investments could include reducing our dependence on foreign oil, repairing our aging infrastructure, retrofitting buildings to make them energy-efficient, and ensuring that our children have the skills they need to participate in the new economy. These kinds of investments would pay for themselves quickly in increased productivity and tax revenues to pay down debts.

So, what could we do with $700 billion over the next decade?

Well, we could build 107,666 new green schools, at the estimated cost of $6.5 million per school. These could replace energy-inefficient schools, generate millions of jobs in the real economy, and create healthy learning environments for the next generation.

Or we could weatherize every home in the United States. The estimated cost of retrofitting all of our 129 million residential units to geographically appropriate standards is $650 billion. This would greatly reduce the need for imported oil and new power plants–and save residents billions of dollars in future energy costs.

How about fixing every substandard bridge? The American Society of Civil Engineers argues we need a 30-year plan to fund needed repair, renovation, or construction of our nation’s deficient bridges. Seven hundred billion dollars would cover the investment needed for the next 41 years.

We could fund a “G.I. Bill” for the next generation, providing 14 million college scholarships for eligible graduating seniors. Making a bold investment in the next generation, like we did with the post-World War II generation, would have enormous pay back.

Almost every state in the union is facing huge budget deficits. The Great Recession has taken a hit against state tax revenues. A percentage of the $700 billion could help strapped states maintain essential services, and employ enough police officers, fire-fighters, and teachers to keep their communities safe and constituents educated.

Congress is truly in a bind. Should the nation borrow $700 billion to help the wealthy, $826 billion if we include interest costs? Or should we pay down the deficit, help ourselves at the state level, and invest in the infrastructure for future prosperity?

Congress is waffling. Our representatives and senators are talking about a compromise of extending the high-income tax cut for two years. This would cost $67 billion.

What would you do with $67 billion? Lawmakers may need our help to make a wise decision.

Chuck Collins is a senior scholar at the Institute for Policy Studies where he directs the Program on Inequality and the Common Good. He is the co-author, with Bill Gates Sr., of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes. www.ips-dc.org