REPUBLICANS on Capitol Hill want to extend the Bush-era tax cuts for the rich, which are set to expire at the end of the year. President Obama and congressional Democrats want to extend the cuts for middle and lower income families, but not for persons making $250,000 or more.
The Bush tax cuts never came close to living up to the promise that they would create jobs – we actually lost private-sector jobs under the Bush administration. Extending the tax breaks for the wealthy also would add billions to the national deficit.
In a statement today, AFL-CIO President Richard Trumka said it is ‘absolutely insane’ that in these tough economic times some people want to continue the ‘tax give-aways to millionaires while working families are losing their jobs, their benefits and their homes.
‘We need to focus on creating jobs by giving tax breaks only to middle-class families and investing in rebuilding our crumbling infrastructure and green technologies. Millionaires and Wall Street already had their party, which tanked our economy and left Main Street stuck paying the bill.’
He urged the lame-duck session of Congress not to compromise on this issue.
‘The election is over and now it’s time for politicians to show courage and stand and fight on these issues for working families. Let the millionaires fend for themselves for a change.’
The SEIU trade union has insisted through its leader Mary Henry that it is, ‘Time for our leaders to focus their attention on creating the good jobs America’s families desperately need.’
SEIU International President Mary Kay Henry continued: ‘We cannot balance our budget on the backs of seniors and people who keep our communities safe and healthy, teach our kids, and plough and repair our roads.
‘It’s unacceptable and irresponsible to cut Social Security and Medicare and eliminate even more jobs at a time when most families are struggling to get by.
‘The proposal released today by the Fiscal Commission Chairs would do nothing to help the 27 million Americans looking for work. And it would force the janitor who cleans dozens of offices each night and the home care worker who lifts their clients out of bed and into their wheelchairs several times a day to work longer into their lives and have their healthcare coverage and other benefits slashed.
‘The American people are hurting. It’s time for our leaders to focus their attention on creating the good jobs America’s families desperately need.’
Meanwhile, economist Dean Baker has blasted the Deficit Commission attack on Social Security
Baker, the Co-Director of the Center for Economic and Policy Research (CEPR) released the following statement on the proposals offered by Erskine Bowles and Alan Simpson, co-chairs of the President’s deficit commission.
‘Senator Alan Simpson and Erskine Bowles appeared to have largely ignored economic reality in developing the proposals they presented to the public today.
‘The country is suffering from 9.6 per cent unemployment with more than 25 million people unemployed, underemployed or who have given up looking for work altogether.
‘Tens of millions of people are underwater in their mortgage and millions face the prospect of losing their home to foreclosure.
‘This situation is not the result of government deficits, contrary to what Mr. Bowles seemed to suggest at the co-chairs’ press conference today.
‘The downturn was caused by the bursting of an $8 trillion housing bubble. This bubble was the basis of the construction and consumption demand that drove the economic expansion through 2007.
‘The large government deficits are the only factor sustaining demand following the loss of this bubble wealth. If today’s deficit were smaller, we would not be helping our children; we would just be putting their parents out of work.
‘Simpson and Bowles somehow think they have covered this concern by delaying their cuts until fiscal year 2012, 11 months from now. Virtually all projections show the unemployment rate will still be over 9.0 percent at the point when the Simpson-Bowles cuts begin to slow the economy further.
‘This leaves the economy like a plane with one engine already out and Simpson-Bowles prepared to knock out the other engine as well.
‘The failure to understand current deficits contributes to a misunderstanding of the debt burden.
‘For example, Simpson and Bowles raised fears of an exploding debt reaching 90 per cent of GDP by the end of the decade. There is no reason that the Fed can’t just buy this debt (as it is largely doing) and hold it indefinitely.
‘If need be, the Fed can use other tools at its disposal to ensure that this expansion of the monetary base does not lead to inflation.
‘This creates no interest burden for the country, since the Fed refunds its interest earnings to the Treasury every year. Last year the Fed refunded almost $80 billion in interest to the Treasury, nearly 40 per cent of the country’s net interest burden.
‘This means that the country really has no near-term or even mid-term deficit problem, just paranoia being spread by many of the same people who led the economy into its current disastrous situation.
‘Over the longer term, the country is projected to face a deficit problem but this is almost entirely attributable to the projection that private sector health care costs grow at an explosive rate.
‘This projected growth rate of health care costs would eventually lead to serious budget problems in addition to leading to enormous problems for the private sector.
‘However, the underlying problem is the broken health care system, not public sector health care programs. For some reason, though, Simpson-Bowles never directly addresses these of the health care system.
‘Simpson and Bowles apparently never considered a Wall Street financial speculation tax (FST) as a tool for generating revenue. This is an obvious policy-tool that even the IMF is now advocating, in recognition of the enormous amount of waste and rents in the financial sector.
‘Through an FST, it is possible to raise large amounts of revenue, easily more than $100 billion a year, with very little impact to real economic activity.
‘The refusal to consider this source of revenue is striking since at least one member of the commission has been a vocal advocate of financial speculation taxes.
‘It is also worth noting that Mr. Bowles is a director of Morgan Stanley, one of the Wall Street banks that would be seriously impacted by such a tax.
‘Finally, it is striking that the Co-Chairs felt the need to address Social Security, even though it was not part of their mandate. The commission’s mandate was to deal with the country’s fiscal problems.
‘Since Social Security is legally prohibited from ever spending more than it has collected in taxes, it cannot under the law contribute to the deficit.
‘Their proposal would cut benefits for tens of millions of middle class workers who are overwhelmingly dependent on Social Security for their retirement income. It would also raise the retirement age for lower income workers who have seen little increase in life expectancy.
‘It is hard to avoid the conclusion that this exercise was a waste of time and that we should go back to having Congress determine our budgets through the normal process rather than secret commissions.’