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A few well-written words can convey a wealth of information, particularly when there is no lag time between when they are written and when they are read. The IPS blog gives you an opportunity to hear directly from IPS scholars and staff on ideas large and small and for us to hear back from you.

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Entries tagged "deficit"

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Maceo Protests at Deficit Talks in Washington

July 29, 2011 ·

Rallies and demonstrations on the debt ceiling crisis are expected to roll through Washington throughout the weekend, as long as Congress, House Speaker John Boehner, and President Barack Obama fail to resolve the deficit crisis that threatens to take the U.S. and global economy down a notch. Tea partiers, flag-waving labor unions, peace activists, gun-loving libertarians, and everyday Americans have all been showing up at the Capitol steps to have their say in the budget debacle.

If Obama, Boehner, and Congress listened to the wisdom of 10-year-olds, and made the wealthy pay their fair share for this budget, kids like Maceo wouldn’t inherit such a large debt burden for them to pay back through their taxes. Photo by Karen Dolan.

Yesterday, 10-year-old Maceo Dolan-Sandrino was among the demonstrators. Maceo is from Maryland, just on the outskirts of Washington, the son of IPS Fellow Karen Dolan. He attended yesterday’s rally at the Capitol to oppose the cuts to our social safety net, services like healthcare and income assistance that many Americans rely upon through hard times. I thought it might be interesting to get a 10-year-old’s perspective on the day’s events. I asked Maceo what he thought about the protest.

At first, Maceo reported that he hadn’t really listened to anything, and that his feet had hurt. But when I asked him again, I got a different answer.

“The protest was about how John Boehner was going to take away social security and how he was going to – um, it was something about the taxes,” said Maceo. “Planned Parenthood was there and they had signs that said, ‘Don’t take away our birth control.’”

I asked Maceo if he realized that the United States was in debt, and that Obama, Boehner, and Congress were trying to decide whether to borrow more money. In return, Maceo offered a surprisingly searing analysis.

“It’s because the rich and wealthy people aren’t paying their fair share of taxes, and all of the big corporations are finding loopholes not to pay taxes, and then we don’t have enough money to pay our debts,” he said.

I found this comment to be incredibly astute. As IPS Fellow Chuck Collins wrote in an article for OtherWords, “Overseas tax havens enable companies to pretend their profits are earned in other countries like the Cayman Islands. Simply making that ruse illegal would bring home an estimated $100 billion a year.”

Making sure our government doesn’t tax the highest income brackets is another way the wealthy avoid paying their fair share of taxes. Since 1970, “the top marginal tax rate on our richest has been halved, from 70 to 35 percent, and our rich have become phenomenally richer,” wrote Peter Diamond and Emmanuel Saez in an article this month on toomuchonline.org. And you can bet that this tax rate plunge had a lot to do with campaign contributions to friendly elected officials. Money talks, Congress listens.

Unlike Obama, Boehner, or most members of Congress, Maceo intends to stick around for quite a while in order to help pay back the debt now being discussed in Washington. I asked Maceo about how he felt about our politicians leaving future generations to pick up the tab after the government has had its spending frenzy.

“I don’t feel good at all. No, I don’t think I’m going to have that money, because I know I’m going to have a family to take care of. So, I don’t feel good about that at all.”

Maceo is a sharp kid. If Obama, Boehner, and Congress listened to the wisdom of 10-year-olds, and made the wealthy pay their fair share for this budget, kids like Maceo wouldn’t inherit such a large debt burden for them to pay back through their taxes.

Tax the rich. For kids like Maceo.

Hollow Deficit Debate Ignores the Burden of Afghanistan Military Spending

July 15, 2011 ·

At this moment the hollow debate on the deficit has sucked up almost all the oxygen in the Capitol. Yet the war in Afghanistan which costs us hundreds of billions of dollars a year is scarcely mentioned. Sixty-four percent of the people of this country believe that the war in Afghanistan is not worth fighting, so representing "the people" should mean using Congressional power to end that war — not least because the war budget is the biggest potential source of money to pay for jobs.

Congress isn't doing that yet. But it's encouraging to remember that there are a few — painfully few! — members of Congress still prepared to really represent the views of their constituents. Seattle-area Congressman Jim McDermott spoke on the floor of the House this week, focusing once again on the unacceptable costs of the Afghanistan war. 

McDermott identified the war as reflecting the kind of military expansion that brings about the collapse of empires. And he even took on the popular claim that it was Ronald Reagan's presidency that brought down the Soviet Union, reminding us all that it was military spending, especially in Afghanistan, that actually brought about Soviet collapse.

Crucially, McDermott noted that the U.S. is now spending two-and-a-half times as big a percentage of its GDP on its ten-year war in Afghanistan, as the Soviet Union spent during its ten years of war in Afghanistan. Here's the speech:

Pawlenty's Tax Proposal Caters to the Richest Americans

June 9, 2011 ·

GOP presidential candidate Tim Pawlenty observed the 10th anniversary of the Bush tax cuts by proposing $2 trillion in additional tax cuts, primarily for millionaires and global corporations.

The former Minnesota governor wants to eliminate the federal estate tax, the nation's only levy on inherited wealth. He wants to lower top tax rates on the rich from 35 to 25 percent. He wants to only tax income from work, not wealth — by eliminating all capital gains taxes.

This makes Tim Pawlenty a billionaire's dream candidate.

He sure knows how to mark an anniversary. The 2001 Bush tax cuts were a $2.5 trillion mistake that put us on the road to fiscal instability. At the time, Congressional budget analysts projected a $5.6 trillion surplus that supposedly would mount up over this past decade.

But even after the rosy projections turned to red ink, the tax cut bonanza continued. Congress engaged in a "decade of magical tax cut thinking," responding to each economic challenge with a one-point program: cut taxes for the wealthy and expand tax loopholes for global corporations. Pawlenty's absurd proposal is the latest articulation of the Republican Party's math-defying magical thinking.

Bob McIntyre, the director of Citizens for Tax Justice argued in 2001 that the tax cut was a bad idea — that it was overly tilted to benefit the rich — and would eventually lead to deficits. Last week, His organization released a report projecting that another 10-year extension of the Bush tax cuts would cost $5.5 trillion. Add in Pawlenty's tax program and we can look forward to $7.5 trillion more in red ink.

An Economic Policy Institute report points out that the Bush tax cuts cost over $2.5 trillion over the last decade. An estimated 38 percent of those tax cuts — almost $1 trillion — went to households in the richest 1 percent, those Americans with annual incomes that exceed $645,000. Pawlenty's proposals are probably even more regressive in terms of who benefits.

Recent IRS data reveals that the richest 400 U.S. taxpayers have seen their effective tax rates fall to their lowest levels since prior to the 1930s Great Depression. Their effective tax rate has fallen from 51.2 percent in 1955 to 18.1 percent in 2008, the most recent year that we have data for. According to the Citizens for Tax Justice, Pawlenty's plan would cut taxes for this richest 400 by 73 percent.

 There is some good news, however. The 10th anniversary of the Bush tax cuts has focused new attention on the irresponsibility of cutting taxes on the wealthiest Americans and corporations even more. Grassroots groups convened actions and press events around the country to dramatize the link between the tax cuts and local budget cuts that worsen unemployment.

 Their message is getting louder and clearer: No more budget cuts until millionaires and corporate tax dodgers pay their fair share. Raising taxes on the rich has to be on the table going forward.

 Activists are also coalescing around a number of revenue proposals that could raise trillions of dollars over the next decade. One initiative is the Fairness in Taxation Act, introduced by Rep. Jan Schakowsky (D-IL). Her legislation would add additional tax rates for millionaires and generate $74 billion a year. "Middle-class and low-income families didn't create these budget deficits or reap economic rewards over the last generation," Schakowsky wrote in a Chicago Tribune op-ed. "So our nation's plan to get our fiscal house in order should not sacrifice the vitality of our middle class and our commitments to address poverty."

85 Percent? How Do You Figure, Mr. Ryan?

April 5, 2011 ·

Back in December, the co-chairs of the bipartisan President’s Deficit Reduction Commission liked their plan’s chances. One of their members was the current chair of the House Budget Committee, Paul Ryan, and he promised that his committee’s budget blueprint would include 85% of the Commission’s recommendations.

Today we have that blueprint, and squint at it as hard as you might; you won’t find anything like that kind of math. The Commission laid down its “guiding principles,” such as:

  • “Don’t disrupt the fragile economic recovery” by cutting too soon. Cong. Ryan’s plan? Let the cutting begin. The deeper the better.
  • Cut and invest “in education, infrastructure, and high-value research and development … to make it easier for businesses to create jobs.” Cong. Ryan’s investment agenda? Nowhere in sight.
  • “Protect the truly disadvantaged.” By slashing Medicaid, Ryan? Really?!
  • “Cut spending we cannot afford—no exceptions.  We must end redundant, wasteful, and ineffective federal spending wherever we find it… including defense.” The commission laid out about $100 billion in military cuts. Cong. Ryan’s plan follows Defense Secretary Gates’  so-called ‘cuts.’ As I wrote when the President’s budget came out, they are not cuts. They slow the projected growth in Gates’ budget, to the tune of $15 billion a year, on average. Attacking the discretionary budget and giving about half of its total—defense--a nearly-free pass is like is like making a cake and leaving out the flour.

This despite the Government Accountability Office’s accounting of $70 billion in new Pentagon waste in the last two years alone. Despite the fact that the U.S. and its NATO allies outspend the rest of the world’s militaries by a factor of two; that the U.S. military alone outspends its nearest competitor, China, by at least six times. That the combined militaries of Iran, Libya, North Korea, Sudan, Somalia, and Syria spend less than one percent of what our military spends.

Despite the fact that support in his own party for putting military spending on the cutting table includes, for starters, House Majority Leader Eric Cantor and the tea party base, Rep. Ryan saw fit to exclude it almost entirely.

If this is 85% agreement, what would disagreement have looked like?

A Government Expense We Would Shut Down: U.S. Trade Representative Office

March 30, 2011 ·

After two months of Egypt, Japan, and Libya dominating the airwaves, the 112th Congress could return to the top of the headlines soon as a government shutdown seems more likely.

Following a series of short-term stopgap funding bills, a $50 billion difference remains between the proposals by top Republican and Democratic leaders. With this in mind, and to fight against the idea that progressives just want to spend our way out of problems, we would like to present a few ideas that might reduce government spending and increase its efficiency at the same time.

The proposed cuts we’ll be laying out in a series of blog posts this week range from military boondoggles to counterproductive drug war policies.

First up in the IPS chopping block is the U.S. Trade Representative Office (USTR). Currently employing a staff of 200 people and leasing real estate in Washington, Brussels, and Geneva, the USTR is an expensive agency, and its work seems increasingly redundant. Sarah Anderson, who directs the Institute's Global Economy project, says:

Trade negotiators aren't following through on President Obama's campaign promises to renegotiate NAFTA and are showing few signs of bringing a fresh approach to talks over new trade deals. If all they’re doing is expanding a model that undermines good jobs and the environment, it would be better to shut down USTR.

This cabinet-level-but-not-technically-in-the-cabinet position has been rumored to actually be in some downsizing plans that would incorporate it into the Department of Commerce. The agency’s chief, Ron Kirk, didn't seem to oppose the rumored move in a recent interview:

It's not a rumor. We've heard of it. We welcome it.... It is hypothetical.... I don't think we should be afraid of stepping back and taking a look and saying what do we do really, really well as USTR, and what do our partners do really well at Commerce or Ag?

The United States has signed 17 free-trade agreements, and is waiting for congressional approval on three more (Colombia, South Korea, and Panama) that the Bush administration negotiated and are similar to atrocious deals like NAFTA. Those agreements are a corporate scam, so why should taxpayers keep funding an agency that despite a change in administration pays its bureaucrats to propose the same thing over and over again?

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