Debt and Taxes

a subtle mix of malice and incompetence…

This was originally published in New Ground 99, March — April, 2005.

by Bob Roman

Some Kill With Guns, Others With Pens
As New Ground goes to press, the House and the Senate Budget Committees were in the process of marking up their budget resolutions. By the time you read this, it is possible that one or both houses will have passed resolutions. Both proposed budgets reflect priorities starkly out of touch with the lives of ordinary Americans. Overall, the proposed budgets would deeply cut critical public investments at the same time as they give more tax breaks to the wealthy and swell federal deficits.

The House committee-passed budget would cut domestic discretionary spending by $216,000,000,000 over the next five years, and the Senate committee-passed budget would cut domestic discretionary spending by $207,000,000,000 over the same period. This would amount to average cuts in public services such as education, community development, veterans’ benefits, and environmental protection of 13 to 14 percent in 2010. The House resolution does not include multi-year caps on discretionary spending, but the Senate resolution does include 3-year caps.

Both the House and Senate budget resolutions would deeply cut entitlement programs: by $67,000,000,000 and $38,000,000,000, respectively. Medicaid, food stamps, the Earned Income Tax Credit and other low-income programs would likely face the deepest cuts. Moreover, both budgets include reconciliation instructions for a portion of these cuts. These reconciliation instructions would facilitate passage of the cuts by preventing them from being filibustered in the Senate, thus allowing them to pass with only 51 votes.

The Senate budget also includes a new budget rule that could harm entitlement programs beyond the cuts called for in the resolution. This rule would require any legislation that increased entitlement spending by more than $5,000,000,000 over any 10-year period between 2015 and 2055 to overcome a 60-vote point of order in the Senate. This new budget process rule would not in any way restrict enactment of new tax cuts that increase the deficit. This is a prescription for permanent irresponsible, unresponsive government. California has similar “super majority” rules written into aspects of its budgeting process; consider the state of their finances today.

While using the massive federal deficits largely caused by the reckless tax cuts of the last four years to justify the above-mentioned deep cuts in public investments, the Bush Administration and its allies are continuing to push for even more unpaid-for tax cuts. Indeed, both the House and Senate budget resolutions call for more tax cuts: $106,000,000,000 and $71,000,000,000, respectively. Moreover, the budgets include separate reconciliation instructions for a portion of these tax cuts ($45,000,000,000 in the House resolution and $70,000,000,000 in the Senate resolution), which would protect these tax cuts from filibuster and non-germane amendments and would allow them to pass the Senate with a simple 51-vote majority. This would not be the first time that reconciliation, a process designed for deficit reduction, would be exploited to pass unpaid-for tax cuts.

The cornerstone of these tax cuts is the extension of the 2003 dividends and capital gains tax cuts, which are set to expire in 2008. At a cost of $23,000,000,000 between 2006 and 2010, nearly one-half of these tax cuts would go to millionaires and nearly three-quarters would go to the top 3.1 percent of households making more than $200,000 annually. Both resolutions also include a one-year Alternative Minimum Tax fix but exclude the virtually guaranteed costs of a similar fix in subsequent years.

Reforms in Illinois?
While Blagojevich cowers at the word “taxes”, finances have hit the fan all across the state, especially in public education and public transit. This has inspired Senators James T. Meeks, Miguel del Valle, and Kwame Raoul and Representatives David E. Miller, John A. Fritchey, and William Davis to introduce SB/HB 750. This bill is primarily intended to provide property tax relief and to provide adequate funding for education on a sustainable basis. It would increase the state income tax rate to 5% and the corporate income tax rate to 8% while providing deductions so that the bottom 60% of individual income tax payers would pay no additional income tax and sometimes less. It would expand the sales tax to cover some services not presently covered, and close some corporate tax loopholes. All this would generate an estimated $7,200,000,000. Of that gross, $2,400,000,000 would be used for property tax relief. Another $1,500,000,000 would be used to eliminate the State’s ongoing budget deficit that the Governor has been filling by juggling books. However, the bill’s primary focus is education. SB/HB 750 would increase the state’s “Foundation level” per pupil support from $4964 to $6092 and is some additional money available for higher education. It also reforms the way education expenses are appropriated so that the State’s habitual under funding of mandated services would cease.

SB/HB 750 has inspired considerable grassroots support. SEIU in particular has made it a legislative priority.

Illinois’ fiscal condition is so bad that the Republicans have actually come up with a counter offer, SB 1484, introduced by Senator Rick Winkel, Jr. The bill is a stripped down version of SB/HB 750, sans tax relief for lower income taxpayers and without reforms in how education funds are appropriated, among other things.

This has not stopped the libertarian right from foaming at the mouth at the prospect of either bill. To these ideologues, there is no funding crisis in public education that increased “accountability” and “efficiency” wouldn’t solve. They make such a noise, like a pack of nasty little dogs, that one can almost forgive Blagojevich his shyness.


Author: rmichaelroman

... whatever ...

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