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By Dave Johnson
Fellow, Campaign for America's Future

The deficit is now down 60 percent as a percent of gross domestic product. It is down more than the deficit hawks Alan Simpson and Erskine Bowles asked for. This rapid reduction is seriously hurting the economy and jobs, but demands for cuts continue. It is time for Congress and the President to “pivot” to focusing on our real problems: the jobs gap, the wage gap and the trade gap.

Mythical Deficit Problem Solved

The “deficit problem” is man-made. When Bill Clinton was president we were paying off the debt. George W. Bush turned Clinton’s budget surpluses right around, calling deficits “extremely positive news” because they would later force cuts in government. Ronald Reagan’s “strategic deficits” began a strategy to make the borrowing appear so bad that the public would be panicked into allowing cuts in the things government does to make our lives better – so the wealthy few could have even more wealth and power. (Reagan tripled the national debt, Bush doubled it again.)

So after Bush we had a problem. When ‘W’ left office the budget deficit was $1.4 trillion. Then after Obama took office Wall Street and the right started terrifying the public about deficits and outlining their “solutions”: Cut government, cut regulation of the giant corporations, cut entitlements, cut investment in infrastructure, privatize public assets, cut the safety net, etc… Cut the things that government does to make our lives better (government spending) and cut the things government does to protect us from the immense power of the insanely wealthy and their giant corporations.

But something got in their way. The deficit started coming down before all of the “solutions” could be forced on us. The deficit is now down 60 percent as a percent of GDP from the level Bush left behind (see the chart in this post). (more…)

Terrance Heath
Online Producer, Campaign for America’s Future

Adam Lanza. James Holmes. Jared Lee Loughner. Seung-Hui Cho. These names instantly bring to mind some of the worse mass shooting massacres of the last decade or so. But they have something else in common. In addition to reviving calls for stronger gun control legislation, their heinous acts also turned America’s attention to dismal state of our mental health system. Every rumor and news report about the mental state of the mass-shooter-of-the-moment, was followed by demands to patch-up the “cracks” in our mental health system through which these young men supposedly fell.

Alas, support for improving mental health services  have proven even more fleeting than support for gun control — until the next shooting, that is. Unfortunately, the sequester will turn those existing “cracks” in to chasms, and create new ones.

A continuing series

Read the full series

Tell your member of Congress

The sequester does the most harm to the most vulnerable, and it’s hard to think of a more vulnerable population — or one with fewer advocates, and less ability to self-advocate — than the mentally ill; especially those with serious mental illness that require more care than our system currently provides. The sequester reserves some of its cruelest cuts for the mentally ill. (Of course, none of it has to happen. Congress passed the sequester, and Congress can repeal the sequester.)

According to the Office for Budget Management, the Substance Abuse and Mental Health Services Administration (SAMHSA) will lost about $275 million under sequestration, with serious consequences for the mentally ill:

• 684,000 individuals will lose critical employment and housing assistance, case management services, and school- based supports;
• 1.13 million children and adults will be at risk of losing access to any type of public mental health support
• 1,300 youth with severe emotional disturbances will lose access to treatment services
• 18,000 fewer homeless individuals will receive outreach services
• 9,000 fewer individuals living on the street will be enrolled in homelessness assistance programs;
• 27,000 of the nation’s most vulnerable homeless individuals will lose access to primary care referrals, housing assistance, education opportunities, and job training
• More than 320,000 children will not receive coordinated mental health services, early intervention and prevention programming, and other suicide prevention services

The Department of Defense, facing $500 billion in sequestration cuts, will have to furlough most of its 800,000 civilian employees for at least one day a week — including more than half of of the army’s 4,500 mental health professionals. For mental health professionals, it means up to a 20% reduction in pay. For soldiers, sequestration means shorter therapy sessions for those dealing with PTSD, less time with physical therapists, and longer waits for grief counseling.

These are just a few of the sequester’s consequences for our mental health, but they begin to paint a picture of what the sequester will do to many vulnerable Americans who will literally have nowhere to go, in a mental health system that was already stressed and under-funded before the sequester. (more…)

By Isaiah J. Poole
Executive editor of the blog site OurFuture.org

The scheme that Apple cooked up this week to finance a $55 billion stock buyback for its shareholders was orchestrated to avoid paying $9.2 billion in taxes, Bloomberg reported Friday.

That $9.2 billion tax bill that Apple dodged would have been enough to make unnecessary all of the major budget cuts we’ve been writing about this week as part of our “Repeal the Sequester” campaign. With $9.2 billion, the federal government could have (based on lists compiled by The Washington Post’s Wonkblog and Think Progress):

• Paid for rescinding the furloughs of air traffic controllers without raiding $250 million from an airport improvement fund.
• Restored Head Start funding to avoid having to kick an estimated 70,000 people out of the program this year.
• Kept Meals on Wheels funding for seniors intact.
• Restored National Institutes of Health funding, so that research on cancer treatments and other diseases could continue uninterrupted.
• Rescinded cuts of up to 10.7 percent in unemployment checks to people who have been looking for work for more than six months without success.
• Kept paying for public housing assistance and housing vouchers for people who might otherwise be homeless or in substandard living conditions.
• Rescinded cuts in programs for children with special needs and learning disabilities.
• Kept already stretched Occupational Safety and Health inspectors on the job, doing the 1,200 workplace inspections that are being shelved by sequestration.
• Fully funded disaster relief programs, a particularly critical need now that a wildfire is currently causing serious damage in southern California.
• Restored $480 million now cut from the FBI’s operations. (more…)

By Robert Reich
Former U.S. Secretary of Labor, Professor at Berkeley

The West, Texas chemical and fertilizer plant where at least 15 were killed and more than 200 injured a few weeks ago hadn’t been fully inspected by the Occupational Safety and Health Administration since 1985. (A partial inspection in 2011 had resulted in $5,250 in fines.)

OSHA and its state partners have a total of 2,200 inspectors charged with ensuring the safety of over more than 8 million workplaces employing 130 million workers. That comes to about one inspector for every 59,000 American workers.

There’s no way it can do its job with so few resources, but OSHA has been systematically hollowed out for the years under Republican administrations and congresses that have despised the agency since its inception.

In effect, much of our nation’s worker safety laws and rules have been quietly repealed because there aren’t enough inspectors to enforce them. That’s been the Republican strategy in general: When they can’t directly repeal laws they don’t like, they repeal them indirectly by hollowing them out — denying funds to fully implement them, and reducing funds to enforce them.

Consider taxes. Republicans have been unable to round up enough votes to cut taxes on big corporations and the wealthy as much as they’d like, so what do they do? They’re hollowing out the IRS. As they cut its enforcement budget – presto! — tax collections decline.

Despite an increasing number of billionaires and multi-millionaires using every tax dodge imaginable – laundering their money through phantom corporations and tax havens (Remember Mitt’s tax returns?) — the IRS’s budget has been cut by 17 percent since 2002, adjusted for inflation.

To manage the $594.5 million in additional cuts required by the sequester, the agency has announced it will furlough each of its more than 89,000 employees for at least five days this year. (more…)

By Richard (RJ) Eskow
Senior Fellow, Campaign for America’s Future

Sure, we urgently need to repeal the sequester.  (You can tell your Representative that here.) But it’s even more important to repeal the insane thinking that led to the sequester.

That means repealing the deficit babble that still dominates Washington (and provided the theme for the President’s weekly Saturday address). It means repealing a conservative Republicanism which is based, not on economic philosophy, but on an atavistic hatred for government in any form.

Most of all, it means repealing the politics of deprivation and replacing them with the politics of growth. We’ve learned that contractionary policy based on government cuts is … well, contractionary.  And that expansion policy is needed if we want the economy to expand.

The argument shouldn’t be about where we should be cutting, but about where we should be spending more money.

Have You Hugged a Keynesian Today?

Pity the poor Keynesian. This benighted economist has been vilified, ridiculed, and marginalized for decades. What was the Keynesian’s crime? To imagine that the proven economic principles which fueled our post-Depression and postwar growth were still proven economic principles.

The assault on Keynesian thinking went hand in hand with other mythologies of the New Economy: You don’t understand our new theories, the Keynesians and neo-Keynesians were told. You’re mired in the thinking of the past.  You don’t understand the information economy. You can’t grasp financial innovation.

And your old models of government action in recessionary times are obsolete because they’re not creative enough. (That’s an especially objectionable word in this context. This is economics, not a university extension course on “Self Expression With Clay.”) (more…)

Sanjay Sanghoee
Author,"The Merger"

I won’t waste space in this blog discussing the harmful effects of the sequester. If the recent FAA debacle doesn’t give you an idea of how bad this is, or how bad it will get, nothing will.

Instead, I want to highlight just how crazy the Republican position is on this issue.

For the past four years, the party has made it its mission to obstruct President Obama’s agenda, and to whittle away at the power of the federal government so that the country can safely be run by special interests without the pesky intervention of the law. On the economy, the GOP has tried everything they can to drain the public sector of much-needed tax revenues and to channel even more money into the hands of their wealthy donors. After all, who needs public roads, subways, housing, hospitals, schools, and the police department when the rich can buy all those services privately?

But even knowing the Republican mindset, the party’s stance on the sequester has left me scratching my head. Granted, the Democrats are as much to blame for the sequester as their opponents, and the political calculation behind it has clearly backfired since our Congress is so dysfunctional that it cannot reach a deal even when confronted with a crisis. But whether you look backwards or forwards, it is the Republican obsession with austerity that led to this, and which is continuing to make it impossible to find a solution.

While the Republicans say they would cooperate with Democrats to repeal the sequester, what they want in return makes the whole exercise pointless. More precisely, they are willing to stop the spending cuts triggered by the sequester only if the Democrats agree to even bigger spending cuts and for even more public services! (more…)

By Dave Johnson
Fellow, Campaign for America's Future

Austerity is beginning to hit and the economy is slowing as a result. The most immediate effect is that flights are delayed, but unemployment checks are smaller and there are fewer things We the People do to make our lives and economy better — also called “government spending.” But hey, as Dean Baker writes in, Deficits Are Bad and the Sun Goes Around the Earth,

…many people can profit from slow growth and high unemployment. The after-tax profit share of GDP is at its highest level more than 60 years. For those who own lots of stock and are at the top of the income ladder, times are good. These people may see efforts to lower unemployment as posing a risk. With lower unemployment workers may be able to get a larger share of productivity growth. This may be good for most of the country and mean increased economic growth, but it would mean less for the one percent.

Deficit Falling, Few Know

In February I posted Deficit Is Falling Dramatically, But Only 6% Know That,

There is no deficit problem. The deficit is down about 50 percent as a share of gross domestic product just since President Bush’s fiscal year 2009 deficit and is falling at the fastest rate since the end of World War II. Yet the Washington debate is about how and where to cut us back into recession. Why?

The post had a chart and some numbers… then,

Once again, because it might be hard to register due to the drumbeat of deficit-scare propaganda, this is a fact: the deficit is falling at the fastest rate since the end of World War II. It is down about 50 percent as a percent of GDP just since Bush’s huge $1.4 trillion fiscal 2009 deficit. And the deficit is projected to be stable for a decade.

… So let’s stop listening to the drumbeat of “deficit shock” propaganda and not be rushed into doing any more stupid, destructive cuts in the things We, the People do to make our lives better.

Finally the post linked to some polling news: only 6% of the public even knew that the deficit is down, most thought it is up, 94 percent of Americans don’t know the budget deficit is getting smaller. I got going about how our “news” media have to be actively misinforming us to get a number like that, only 6% of us even knowing the basic facts… (more…)

By Paul Buchheit
Author, editor, expert on income inequality

Multinational corporations have built their businesses on the backs of American taxpayers. They’ve depended on government research, national defense, the legal and educational systems, and our infrastructure.

Yet they’ve turned around and mocked us with declining tax payments. They’ve cut workers. They’ve refused to invest their massive profits in job-producing research and development. And they’ve insulted existing employees with low wages and dwindling retirement support.

As a final disdainful act, many of them have tried to convince us that they LOSE money in the U.S. while only making profits overseas.

Here are the facts.

Business Built on Our Backs

(a) Research

The most essential aspect of business growth is the long-term basic research that is largely conducted with government money. Starting in the 1950s, taxpayer-funded research at the Defense Advanced Research Projects Agency (the Internet), the National Institute of Health (pharmaceuticals), and the National Science Foundation (the Digital Library Initiative) has laid a half-century foundation for corporate product development. Even today 60% of university research is government-supported.

The tech industry is a special case, with many computer and communications companies coming of age in the 1990s, when industry funding for computer research declined dramatically and government research funding continued to climb. As of 2009 universities were still receiving ten times more science & engineering funding from government than from industry.

(b) Infrastructure

Thanks to the taxpayer-funded National Highway System, corporations have acquired access to markets across the country for over 60 years. Along with road construction came the water, electric, and telephone facilities needed to sustain their businesses.

Today, the publicly supported communications infrastructure allows the richest 10% of Americans to readily manipulate their 80% share of the stock market. CEOs rely onroads and seaports and airports to ship their products, the FAA and TSA and Coast Guard and Department of Transportation to safeguard them, a nationwide energy grid to power their factories, and communications towers and satellites to conduct online business. Private jets use 16 percent of air traffic control resources while paying only 3% of the bill. (more…)

Bill Scher
Online Editor, Campaign for America's Future

President Obama’s budget proposal may have a lot of new concessions to Republicans, but on taxes, his flag is firmly planted where it has always been: Make the tax code more progressive.

Already with ObamaCare and the fiscal cliff deal he has achieved the most progressive tax code since 1979, and this budget would make it even more so.

The new budget calls for another $600 billion in tax revenue over the next t0 years, almost solely from the wealthy.

The budget would install a 30% minimum tax on millionaires and close the hedge fund loophole, ending the ability for Wall Street executives to pay a lower tax rate than their secretaries. The budget would also cap the amount of tax deductions the wealthy could take, limit the ability of multimillionaires to use IRAs as massive tax shelters and raise the estate tax.

There’s been talk about President Obama’s concession on corporate tax reform by pledging it will be revenue-neutral: swapping loophole closures for lower overall tax rates. But this is not a concession, or at least, not a new one.

He has publicly embraced revenue-neutral corporate tax reform in his 2011 State of the Union address, his February 2012 “Framework for Business Tax Reform” and in the October 2012 debates with Mitt Romney. (more…)

By Bob Cesca
Author, “One Nation Under Fear”

Last week, the president released his 2014 budget and, among some solid line items like additional infrastructure spending, universal preschool and reductions in tax breaks for Big Oil, he also proposed the truly stupid idea of linking Social Security cost-of-living-adjustments (COLAs) to something called “chained CPI” (chained consumer price index).

Briefly put, Social Security benefits are routinely hiked by a few percentage points each year based on inflation. Lately, those bumps have been scarce and more than a little weak, but adjustments based on chained CPI would be even weaker because the government would presume that as retail prices increase with inflation seniors will substitute lower-cost items. In other words, the government currently calculates benefits based on inflation, but with chained CPI, the government would calculate benefits based on an assumed consumer reaction to inflation (buying cheaper stuff). Consequently, Social Security benefits would be reduced to follow this assumption.

Yeah, it sucks. And the president, while attempting to play the role of the grown-up in the room and apparently taking responsible steps toward deficit reduction and Social Security salvation, is only managing to wrap his entire presidency around the big political third rail. It’s not as huge as George W. Bush’s second-term embrace of Social Security tinkering, but it’s a bad move.

Not only is the idea a punitive one for seniors, but the president is also fueling a series of inside-D.C. myths. They are:

1) Social Security is broke! IEEE! This might, in fact, be biggest D.C. myth of all D.C. myths. It originated with Republican concern trolls who pretend to care about Social Security but, in reality, are trying to kill it. The strategy is to weaken it to the point of being unpopular and unsalvageable — ripe for a private takeover or total shutdown. And so we get this on-going panic-button freakout that echoes through the complacent false equivalence press corp, and is ultimately fueled by Democrats like the president. But according to the Social Security trustees, the program will be capable of paying full benefits based on the current COLA formula for the next 20 years. Actually, the outlook is even better than that: the trustees also reported that Social Security will run a surplus until 2033. Can you imagine if any program in the federal government was projected to run a surplus for even half of that time? Budget hawks would crap their cages demanding immediate action to give back the taxpayers’ money by slashing the program to the line. Furthermore, once 2033 rolls around, Social Security will be capable of paying 75 to 80 percent of total benefits in 2033 money, which, accounting for inflation, is more than Social Security recipients receive today.

2) We have to tinker with Social Security because of the deficit. Whenever deficit hawks suffer from one of these routine fits of apoplexy, they always manage to loop Social Security, Medicare and Medicaid cuts into the mix, along with cuts to minor spending areas like foreign aid. Put another way, a gaggle of super-wealthy politicians and pundits who will never really need Social Security are always way, way, waaaay too eager to dump these programs onto the chopping block. In a budget crisis that’s ginned up by multi-millionaires, we should demand that they get in line first — cut programs and spending on areas that effect the wealthiest Americans, including corporations, before anyone else is forced to pitch in. (more…)