Nel's New Day

December 23, 2013

Budget Deal – Bipartisan But Superficial

Filed under: Uncategorized — trp2011 @ 8:21 PM
Tags: ,

Last week, many in the United States—including those who buy stocks—gave a huge sigh of relief that the GOP extremists weren’t going to push the country over the cliff. At least not again in 2013. In a hugely bipartisan deal, the Senate passed the budget by a 64-36 vote after the House had moved it on with a 332-94 vote. Nine GOP senators and 169 GOP House members voted in favor of the bill. The GOP presidential wannabes Sens. Ted Cruz (Texas), Marco Rubio (Fla.) and Rand Paul (Ky.) all stuck to their guns with “no” votes, but at least they didn’t scuttle the bill. The $85 billion bill over ten years fell far short, however, of the $4 trillion that deficit hawks wanted. A bonus for Medicare doctors is the .5 percent payment increase through the end of March.

The wealthy didn’t have to shell out a penny for the increased taxes. The bottom 80 percent paid for the cuts when federal employee retirement benefits were sliced by $6 billion and military retiree benefits by another $6 billion. Anyone flying will pay an additional $2.50 to $5.60 per ticket.

The good news is that the country did not shut down during the Congressional holiday recess. The bad news:

  • The two-year budget did nothing about the struggle to provide decent jobs in the United States. The middle class is sinking into the mire, poor wages result in rapidly rising inequality, and continual unemployment provides growing insecurity.
  • Nothing was done to fix the hatchet sequester cuts that equates a bloated defense budget and threadbare domestic programs such as education, infant nutrition, and clean energy.
  • The deal approved the faulty policy that workers have too much money and the wealthy don’t have enough. Federal workers pay for reducing the deficit while global corporations continue to export jobs and profits while evading taxes. Billionaires keep their inordinate tax breaks without investing in the nation. In the last two years, federal workers gave up over $113 billion for deficit reduction since 2011, including a three-year pay freeze, increased pension contributions for newly hired employees, the up to eight furlough days caused by sequestration this summer, and a 16-day shutdown in October.
  • Nothing was done to help the unemployed, the 1.3 million people forced deeper into poverty by being denied unemployment benefits. The issue of food stamps was also not addressed while extremists push to take more money from the safety net.
  • Republicans opposed repeal of sequester, tax increases, expanding investments, and focusing on domestic problems. They won all those. All that Democrats got was preventing deep cuts in Social Security, Medicare and Medicaid.

The American Dream of a budget would pass these:

  • Repeal of sequester cuts.
  • Protection of Social Security, Medicare, Medicaid and programs for the most vulnerable.
  • Detailed investments for the future in education, infrastructure, clean energy, job training, service programs.
  • Tax reform to require wealthy and corporations to pay a fair share of taxes through removal of loopholes and protections for offshore tax havens.
  • Elimination of fossil fuel subsidies.
  • Increase of the minimum wage.
  • Prevention of the drug company rip-offs with government negotiation for bulk discounts in prices.
  • Unemployment extensions.
  • Alternative energy tax credits and subsidies with carbon tax and carbon reduction targets.
  • Increases in school lunch programs, child-care programs, elderly care programs, and the social security ceiling to $500,000 annual income.
  • Constitutional amendments prohibiting private campaign financing and denying corporate personhood.

Extending unemployment payments is a way to immediately help the country’s economy. Every dollar spent on unemployment insurance contributes $1.60 to GDP while dividends or capital gain tax cuts provides only $.40. The unemployed spend their benefits immediately where as tax cuts for the wealthy go into savings, sometimes in the Cayman Islands. It’s been estimated that the loss of these benefits will lose 310,000 jobs.

The government could solve the long-term unemployed problem:

  • Fund direct employment as people search for new jobs.
  • Increase transportation opportunities so that workers can get to work.
  • Expand work-sharing programs by allocating prorated benefits to help businesses not lay off people.

The threat of a government shutdown isn’t over. The debt ceiling looms in early 2014, and Republicans are again willing to take the country hostage. House Budget Chairman Paul Ryan (R-WI) said:

“We don’t want nothing out of this debt limit. We’re going to decide what it is we can accomplish out of this debt limit fight.”

On the Senate side, Minority Leader Mitch McConnell (R-KY), facing stiff competition in his 2014 primary, agrees with Ryan and plans another game of chicken over raising the legal borrowing limit. President Obama has said that he won’t negotiate on the debt limit and that Congress has an obligation to pay the bills for spending it has already authorized.

Last fall, the GOP got the blame for the government shutdown, causing the impetus to pass the two-year budget agreement. The next fiscal fight is closer to elections with extremists nipping at the heels of conservative senators such as John Cornyn (TX), Mike Enzi (WY), Lindsey Graham (SC), and Pat Roberts (KS). Supposedly Republicans have already caved into Dems over the budget; they can’t afford to do it again. But they may not realize that.

The best way to save money at the federal level is to stop privatizing. Contractors from the $6 billion management-consulting firm Booz Allen Hamilton to Boeing, the defense contractor making $82 billion in global sales, these contractors cost twice as much as civil servants. Boeing and Northrop Grumman are some of those that cost almost three times as much. Last year, contractors were allowed to charge the government as much as $763,029 per worker.

The new budget deal caps contractor salary at $487,000, more than the president’s $400,000 salary. In addition to salary, for-profit contractors get perks such as golf outings and executive retreats in addition to overhead such as renting space or operating buildings that the contractors own. Of the $31.5 billion in invoices to the Army from private contractors, $16.6 billion were for overhead.

Nonprofits get between zero and 3 percent for overhead although overhead costs for nonprofit human services agencies average about 17 percent. They also operate under much more difficult rules than for-profits, who can organize a new business if they are caught in fraudulent financing. About 27,000 Pentagon contractors, 11 percent, get defense contracts after evading taxes.

Congress could save as much as $300 billion annually by replacing corporate contract workers with civil servants, streamlining bureaucratic management, and relying on low-cost nonprofit contractors. Paying unemployment for the 1.3 million people who lose their benefits this Friday costs about $25 billion. The government would have $275 billion left over if they helped the poor people instead of supporting the lifestyle of the wealthy.

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