Republicans: Determined to Damage Our Economy, Whatever it Takes

I took a short break from my focus on gun violence prevention to write about how Republicans are damaging our economy and harming the middle class with their incessant drive to cut government spending. Particularly relevant as Republicans are now threatening to shut down the government come Oct 1 and let the U.S. default on past spending obligations if they don't get their way.

House Majority leader Eric Cantor asserts the deficit is growing, using that as the rationale for further cuts in federal spending. In fact, as reported by the Congressional Budget Office, the deficit is falling steeply, to less than half of what it was as a proportion of GDP in 2009.

This continued deception by Republicans as a means of advancing their obsession with fiscal austerity is doing the opposite of what it claims. Across the board, corporate, academic and government economists are telling us that job growth, economic recovery and longer-term prosperity are being hindered by cuts in government spending.  

The Federal Reserve was uncharacteristically blunt when it said “fiscal policy is restraining economic growth.” The Federal Reserve Bank of San Francisco reports that fiscal policy has become “unusually contractionary.” It estimates that growth could be reduced by as much as 1 percentage point annually over the next three years if current policies continue.

The International Monetary Fund believes the sequester has put a “heavy toll” on short-term growth, and that its “indiscriminate” cuts in investment-oriented spending could reduce longer-term economic growth.

As reported in The New York Times, Bank of America Merrill Lynch told its clients that “fiscal drag has likely reduced growth this year at least 1.5 percentage points, and isn’t over yet.” The chairman of the Economic Advisory Committee of the American Bankers Association stated “greater-than-expected fiscal drag…could still pose downside risks.”  

Princeton economist and Nobel laureate Paul Krugman has reported extensively on the fallacy of austerity policies, noting that “any fiscal savings come at the expense of reduced output and higher unemployment.” Calling austerity in the current environment “a terrible idea,” Krugman explains that contractionary policy “may inflict long-run economic damage that actually worsens the long-run fiscal position.”

Despite this, Republicans are gearing up once again to use debt ceiling negotiations to blackmail the Obama administration into further spending cuts, mostly at the expense of the less advantaged. At significant cost to the recovery, Democrats have already made major concessions on spending. 

Tax and entitlement reform are necessary to long-term economic growth, but in the short run, stimulus is what’s needed, not austerity. It’s time to listen to the experts, and stand firm against the destructive Republican economic agenda. 

Hime's Opponent is Playing Both Sides of Fence

Another example of a Republican trying to hide his real colors...

If ever there was an election in which Democratic and Republican candidates represent dramatically different values, this is it.  The electorate is keenly aware of the differences.  Recent polls show that a majority of voters believes that President Obama’s policies will help the middle class.  Unlike Governor Romney’s policies, which a majority believes favor just the wealthy. Romney has been forthright with where he stands, not backing down from his statement that nearly half the nation doesn’t take responsibility for its own well-being.

But here in Connecticut’s 4^th Congressional District, Republican challenger Steve Obsitnik refuses to state where he stands on important issues.  He is trying to appeal to moderate voters without repudiating radical Republican policies.  On his website he says he will “fight to ensure that seniors receive the healthcare they need.”  But he refuses to go on the record about whether or not he supports the Ryan budget plan.   Ryan’s plan turns Medicare into a voucher system that would likely not allow seniors to buy the coverage they receive today. 

Obsitnik says he supports “women’s reproductive choice”, but has repeatedly refused to answer whether he supports the constitutional protection of Roe v. Wade, which Romney and Ryan vow to overturn.  Obsitnik wants lower taxes and a reduced federal debt, but offers no plan for how these incompatible goals can be achieved without decimating investments in education, infrastructure, jobs and energy independence. 

In contrast, Jim Himes has a voting record that makes his positions clear.  He stands behind his vote for the Affordable Care Act, which will extend healthcare coverage to millions of Americans.  He is working to find fair, balanced solutions to our fiscal problems, being called a “hero” by USA Today for voting for a compromise budget modeled on Obama’s bipartisan Simpson-Bowles Commission.  Congressman Himes is the thoughtful, bipartisan legislator we need to move the country forward.  He deserves to be re-elected.

Republicans' True Colors

Republicans say they care about creating jobs and bringing the federal budget into balance.  Simple facts demonstrate that their true agenda is focused on increasing the wealth of the richest Americans, above all else.

It was the last Republican president who saddled us with $2.5 trillion of budget-busting costs with his irresponsible tax cuts passed in 2001 and 2003. Those cuts brought tax rates to their lowest levels in decades.  Nearly half of the cuts have gone to the richest five percent of taxpayers.  If tax cuts for the rich are the way to stimulate job growth, as forcefully advocated by Mitt Romney, why did Bush’s eight year reign produce the worst record of job growth of any president in the last 80 years? 

In fact, according to Bureau of Labor Statistics data, he is the only president since Herbert Hoover responsible for a loss in jobs during the budget cycles for which he was responsible.  In contrast, President Obama has created 3.4 million jobs since his first budget went into effect.

The explanation is simple.  Jobs are created by consumer spending, which accounts for 70 percent of economic activity.  The way to boost spending, and job growth, is to increase the purchasing power of those who need the extra cash the most and will spend it.   Through tax policy, this can be accomplished with extended unemployment benefits, payroll tax cuts, earned income tax credits and continuation of income tax cuts for the middle class, precisely what President Obama has proposed, but which Republicans have stood in the way of passing. 

Yet Mitt Romney, Paul Ryan and Congressional Republicans insist on extending tax cuts for the richest two percent of taxpayers, at a ten-year cost of $1 trillion.  And showing their true colors, they oppose extending the earned income and child tax credits , which would put more cash in the hands of working Americans struggling to get by.  Apparently the no-tax-increase pledge signed by Romney and virtually every Congressional Republican applies to the rich, but not the poor.

This election poses stark differences in values and desired outcomes.  The Democratic vision for prosperity embodied by Jim Himes, running for re-election in the 4^th Congressional District, and Chris Murphy, running for U.S. Senate, emphasizes shared sacrifice, fairness and fact-based policy to boost economic growth and security for all Americans.  Republican policy, in contrast, will continue to favor the very affluent, without regard to the impact on tens of millions of middle and lower income Americans.

Why not raise taxes on the least affluent Americans?

I have to give Eric Cantor credit for finally being honest about the Republican desire to fund tax cuts for the wealthy from the pockets of the middle class.  This came to my attention from the informative Citizens for Tax Justice, which reported on Cantor's moment of tax transparency. That was grist for my latest piece on the deceit of the Republican agenda.

Eric Cantor, the Republican House majority leader, signed Grover Norquist's "no tax pledge.” But apparently his pledge doesn’t apply to the 45 percent of workers who make so little money that they don't owe federal personal income taxes. At a private event hosted by Bank of America, Cantor said we “have to discuss the issue” of increasing personal income tax rates for these workers so that he can lower tax rates for everybody else.  The rationale: to get the economy growing again.

Cantor’s appeal continues the Republican opposition to tax relief for the middle class, despite their vigorous opposition to raising taxes on the wealthiest Americans. As these actions demonstrate, the agenda embraced by the Republican Party and fully supported by Mitt Romney is misguided and deceitful.

Cantor's remarks can only be interpreted as suggesting that the rich are over-taxed and the middle class is under-taxed. In fact, data compiled by the nonpartisan Institute on Taxation and Economic Policy shows that when all taxes are taken into account, our tax system is barely progressive. In 2011, the share of taxes paid by the top one percent (21.6%) matched their share of the country's income (21.0%).   The top one percent paid 29% of their income to taxes; the rest paid nearly the same amount, 27.5%.

Not only do the wealthy not pay higher average tax rates than others, but taxes for them are at the lowest levels in more than 50 years, thanks to Republican policies that have dramatically lowered rates on the highest income brackets, and preferentially treated investment income that goes mostly to the wealthy.

Republicans want us to believe that lowering taxes for the rich will trickle down and help the middle class. It's not true. Over the past three decades, per capita income has grown no faster in the U.S., where top tax rates were cut substantially, than in European countries that did not cut their top rates.  Long ago, President George Bush called supply-side economic theory for what it is, “voodoo economics.”

What is true is that the Republican tax agenda has benefitted the wealthy enormously.  The Congressional Budget Office reported that from 1979 to 2007, household income for the top one percent rose 275 percent, while for bottom fifth of households, it increased just 18 percent.  As the middle class struggles with the aftermath of the Bush-era Great Recession, most of the gains are going to the ultra-wealthy. As the economy recovered in 2010, nine out of every ten dollars of additional income versus 2009 went to the top one percent. That equated to a 12% increase in income for those fortunate few, while the bottom 99 percent gained, on average, just an extra $80!

That hasn’t stopped Republicans from pushing policies, cloaked as job building, that help the wealthy even more. The House Republican leadership has introduced The Small Business Tax Cut Act, which lets most small businesses (those with less than 500 employees, hardly the definition of small) deduct up to 20 percent of their income in 2012, a $46 billion expense to taxpayers. According to the independent Tax Policy Center, nearly half of the cuts will go to people making more than $1 million. What's worse, it will do little to create jobs.  The economic impact is “so little as to be incalculable,” according to the official analysis by the Congressional Joint Tax Committee.  More reason not to believe Republicans and Romney when they talk about the wisdom of their policies for lowering the deficit and growing the economy.

Companies don't have to hire new workers to receive the credit, one of the reasons that an analysis by the Congressional Budget Office ranked business income tax cuts as the second-most expensive way to create jobs among those evaluated.  It isn't taxes (or regulation) that are keeping businesses from growing.  Rather, it is lack of demand, as reported in a survey conducted last fall by the National Federation of Independent Businesses.

What's the most tax-efficient way to create job growth?  According to the CBO, it is payroll tax cuts and unemployment insurance that put money into the hands of those who need it most, and will stimulate the economy by spending it.  Precisely the two middle class-friendly policies that Republicans have stood in the way of since President Obama took office. 

Rhetoric aside, the facts are clear:  the Republican agenda is about making the wealthy richer, not putting Americans back to work. On this point, Eric Cantor is clear: “I've never believed that you raise taxes on those who have been successful.”

Republican Storyline: Fact or Fiction?

I've been on the sidelines too long. We must elevate the national discourse. Here's my attempt, my latest letter to the editor.

Our country faces substantial challenges. While there will always be differences about the policies needed to surmount them, we can only achieve success through an honest debate based on accurate representation of facts. Sadly, truth is in short supply in the Republican Party.

Mitt Romney says that more jobs have been lost during President Obama’s tenure than any president since Hoover. Newt Gingrich accuses Obama of being the “food stamp president.” Both candidates ignore the fact that Obama inherited an economy in worse condition than any time since the Depression. It is dishonest to hold Obama accountable for the 3 million jobs lost during the first six months of his administration, the disastrous legacy of Bush’s fiscal mismanagement, while not recognizing the economic recovery for which his policies are responsible. Since June 2009, Obama has added 1.2 million jobs to the economy, more than half of what Bush added during his entire eight year tenure.

Romney recently claimed that “I’m not terribly worried about the very wealthiest in our society. They’re doing just fine.” So why does his proposed tax plan, as analyzed by the non-partisan Institute on Taxation and Economic Policy, afford the wealthiest 1% tax breaks that are three times larger, in percentage terms, than the bottom 80%?

Republicans say that creating jobs is their top priority, but stood in the way of a payroll tax break for 160 million workers (that Moody’s Analytics estimated would add 750,000 jobs) because it was to be paid by a small tax increase for the wealthiest Americans. Their alternative was to lay off 10% of the federal workforce, which would only exacerbate the problem. And lest one assume that Republican administrations lead to smaller government, the facts prove otherwise. President Reagan increased nonmilitary payroll by nearly one-quarter million. George W. Bush increased it by 53,000. Under Obama, the federal workforce is smaller than it was when Reagan took office, in no small part due to the Democratic administration of Bill Clinton, which lowered the federal payroll by 380,000.

We need to evaluate the Republican storyline carefully; it’s apt to be more fiction than fact.

GOP Hypocrisy on Student Loans

Isn't it interesting how all the Republican arguments about protecting the taxpayer fade away when it comes to delivering largess to corporations. It seems that giving subsidies is only irresponsible when it helps citizens. In this case the topic is student loans...

The hypocrisy of the Republican Party knows no bounds. Near daily, Republican leaders rail against a public option for health insurance, saying it represents an unfair intrusion into the private sector, and an unwise use of taxpayers' money.

Yet when it comes to eliminating corporate welfare paid for by taxpayers, they yell "foul." Subsidizing the private sector is acceptable, competing with it is not. Such is the case with the Student Aid and Fiscal Responsibility Act, which eliminates government payments to banks to encourage student loan lending. As it turns out, it would be a much smaller drain on the federal budget for the government to lend directly to students, rather than subsidizing banks to do the same lending. Less expensive to the tune of nearly $90 billion over the next 10 years, as forecast by the nonpartisan Congressional Budget Office.

But 17 of the 19 Republican members of the House Education and Labor Committee opposed the bill because it replaces private capital in the student lending market. Here is a clear-cut case where Congress can advance an important social goal -- encouraging higher education -- and save taxpayers billions of dollars. It's a win-win by any measure. This one, simple reform could pay for almost one-tenth of President Obama's proposed health care reform.

It's time to call the Republican leadership to account. If they are so opposed to government spending, why are they in favor of giving nearly $90 billion of taxpayer money to the private sector without getting anything in return?