Why do we now have such a large federal budget deficit?
1. Ten years of the Bush tax cuts enacted in 2001 and 2003 have accumulatively cost $2.5 trillion dollars in federal revenues. The tax cuts primarily benefited wealthy individuals and corporations, turned the modest budget surpluses under the Clinton administration into growing deficits, but failed to promote economic growth. Tax revenues remain depressed as even fewer workers are employed at decent wages following the onset of the Great Recession.
2. The costs of the lengthy wars in Afghanistan and Iraq are being paid for by borrowed money rather than taxes.
3. When the great recession broke out following the financial collapse caused by reckless speculation on the housing derivative markets, the federal government borrowed more money to bail out banks and other financial institutions. The Obama Administration also administered a modest but costly economic stimulus program that alleviated the worst consequences of the crisis, especially for state and local governments and for the unemployed. However that stimulus funding has lapsed, threatening millions of vital jobs in education and other public services at the state and local levels.
What is really at stake in the Budget Debate in DC?
A manufactured crisis over raising the debt ceiling is being used by Republicans and conservative Democrats to attack Social Security and Medicare, which are highly popular, cost efficient and vitally needed government “entitlement” programs. Our values as a nation are expressed in the national budget, in how we raise our national revenues and prioritize our spending.
What are Republicans Up To in DC?
Republicans are holding the country hostage by refusing to raise the debt ceiling; they will only do so if the federal government caps domestic spending at a fixed percentage of GDP and passes a balanced budget amendment. Both of these policies would have disastrous long-term results for the U.S. economy. The Republicans also refuse to raise taxes, even by permitting the last set of “temporary” Bush-era tax cuts to lapse. Their real aim is to hamstring government from having any positive role in society.
The Republicans’ concern for the “deficit crisis” is hypocritical. Conservative policies of tax cuts for the rich and deficit-financed military expenditure are the real causes of our deficit problem, not excessive government spending on health, education, and child care. Nearly half of the total $14.2 trillion total debt owed by the United States government derive from loss in government revenue due to the Reagan and Bush tax cuts for the wealthy and corporations and by their administration’s huge increases in military spending.
Is the Obama Budget an acceptable alternative?
Whereas the Obama proposal would permit some revenue growth by allowing the last Bush tax cuts for the rich to lapse and would limit the threats to Social Security and Medicare, it is inadequate. It would freeze the “Discretionary expenditure” that constitutes only 17 per cent of the federal budget. This rather miniscule portion of the budget is what funds education, transportation, child care, and investments in energy, infrastructure and job training. Freezing these items at current levels would neither encourage sufficient economic growth to reduce unemployment, nor would it provide for adequate transfers of funds to state and local governments to prevent the expected millions of layoffs of public employees.
Is there an alternative?
The People’s Budget of the Congressional Progressive Caucus Restores a Humane Budget by Taxing the Wealthy and Cutting Unnecessary Military Spending. By restoring progressive taxation and enacting prudent, but major cuts in “defense” spending we can have a humane federal budget that funds productive public investments for our future. The People’s Budget for fiscal year 2012 put forth by the 88 Democratic House members (plus Senator Bernie Sanders, I-VT) of the Congressional Progressive Caucus, is guided by these principles. This budget, which calls for an end to the wars in Afghanistan and Iraq and major cuts in defense spending, preserves all funding for anti-poverty programs and radically expands public investments infrastructure, education, job training, and alternative energy by $300 billion a year – while bringing the total budget into balance by 2021.
Why don’t we read about the People’s Budget in the Mass Media?
The mass media have bought into the mantra being produced by the “noise machine” funded by the corporate right-wing that pretends that the U.S. has a real deficit crisis that can be solved only by slashing needed government programs and thereby throwing the most vulnerable groups in society under the bus. The Obama administration and conservative Democrats believe this snake oil remedy as well, and seek to “compromise” with the Republicans who are hell-bent on their destruction. The rational solutions of raising tax revenues from the wealthiest individuals and most profitable corporations and slashing unneeded military spending in order to fund vital social programs and provide the infrastructure for future growth are rejected out of hand as politically impossible.
What could change this lose-lose dynamic?
Only determined, sustained and militant intervention by all who suffer from misplaced national priorities (nearly all of us!)