The consequences of governance by delusional minds were vividly displayed this week. On March 16th, the Republican-led Senate approved a $2.8 trillion election-year budget that broke spending limits only hours after it increased federal borrowing power to avert a government default. Even more embarrassing, the Republican-led Senate increased the debt limit to nearly $9 trillion.
Confronted with elections this November, some Republicans opted to abandon their “starve the beast mentality” and joined with Democrats to approve more than $16 billion in added spending for social, military, job safety and home-heating programs, exceeding a ceiling established by President Bush. Meanwhile, the House advanced $92 billion in war spending and hurricane recovery money.
Both conservative intellectuals and progressives have lamented the reckless spending of the Republican Party in recent years. Pathetically, the GOP criticizes spending but refuses to acknowledge that Bush’s tax cuts were the catalyst for our current mess. Sort of like an alcoholic who is angry with a DWI accident but avoids talking about their drinking problem.
Democrats are giddy about an opportunity to seize control of fiscal responsibility as their. Politically the Democrats can make a strong claim. Kennedy, LBJ, Carter and Clinton were far superior fiscal managers than Nixon, Reagan, Bush I and Bush II. LBJ is especially notable because Vietnam raged on his watch while he launched his Great Society Programs. Nevertheless, his 1969 budget boasted a $3.2 billion surplus. True, LBJ’s budget contained gimmicks but all the chicanery in the world could not do the same under President Bush today.
While both parties jostle over the mantle of fiscal responsibility, two important issues are not receiving enough attention: lost revenue for the states and a widening investment deficit. The Center for American Progress released a report on Thursday about the 2007 fiscal year budget and the impact on states. Their report notes the following correlation between Republican tax cuts and state revenues:
“When the federal government cuts taxes, those tax cuts sometimes cause reductions in state revenue as well. This occurs because most states with individual and/or corporate income taxes use the federal definitions of adjusted gross income and corporate income as the basis for their own income taxes. When a tax cut reduces the amount of income that is taxable for federal tax purposes, it often also reduces the amount of income taxable for state tax purposes.”
The report estimates that new tax cuts in Bush’s 2007 budget will cause states to lose $38 billion over the next ten years. By the year 2016 it is estimated the states will lose $8.1 billion in revenues annually.
Why does this matter? As the years unfold our nation will endure a sickly investment deficit impacting education, homeland security, disaster recovery, entitlement programs and education. Much of this burden is carried on the oppressed shoulders of state and local governments.
Deficits are acceptable if money is spent on programs that society will get a return on. For example, conservatives initially chafed about the cost of FDR’s GI Bill but the investment established a growing middle class and tax revenues increased ten fold.
Bush hemorrhaged the surplus he inherited from Clinton and America has received nothing of value in return: homeland security was not improved after 9/11, “No Child Left Behind” is under-funded, the new prescription drug law is simply a boondoggle for HMO’s and the pharmaceutical industry, both suburban and urban infrastructures are decaying. One could go on and on.
States such as Tennessee are looking to cut back on Medicaid for the poor. The rhetoric used is preventing fraud – which is important. Mostly though cutbacks in Medicaid are going to hurt the working poor and their children.
In recent years we’ve seen Oregon forced to reduce their school year and Oklahoma release violent criminals because they can’t afford to house inmates. Education and health care are always the first targets when cuts are needed to subsidize tax cuts for the wealthy. This is true on the municipal level as well as federal.
Perhaps the most damaging legacy is precisely what was intended: small mindedness among the political class and the nation at large. We don’t think big anymore about addressing challenges such as national healthcare and jobs. If a liberal dared to propose a modern works program on the scale of Roosevelt’s WPA, there would be ridicule on the conservative right and hand wringing among feckless Democrats.
Yet that is exactly what our country needs. Education alone will not generate domestic jobs. America needs a major jobs program designed to employ our own citizens providing livable wages and decent health care. We have schools that require construction to reduce class size, teachers that need to be trained, toxic waste dumps that need to be cleaned, roads in need of repair. Our suburbs are over a half century old and could use a touch up. Not to mention an entire region in the Gulf Coast that remains to be rebuilt. These needs are jobs waiting to be created and filled by Americans.
Meanwhile, health care resembles the old cliche about the weather: everybody talks about it but nobody does anything about it. We need action, today. Sadly, Democratic politicians are faint hearted about tackling national health care while Republicans merely want the issue to go away.
Ironically the biggest supporters today for a national health care policy would probably come from the small business community. Removing the burden of health care for the small business entrepreneur could turn out to be a job stimulus program in its own right.
If Democrats hope to be a worthy governing party their timidity must be jettisoned forthwith. Republican fiscal mismanagement gives them an opportunity if they seize it the right way. That means don’t simply emulate conservative talking points about spending. Rather, Democrats should boldly provide an alternative and unflinchingly address our investment deficit. If we’re going to be indebted to bankers from China and Saudi Arabia, we might as well get something from it.
I propose that Democrats state outright they will reverse Republican tax policy and do the following instead:
- Assemble a substantial aid package to bail out state governments from debt;
- Implement deficit spending for a large scale domestic jobs program encompassing all fifty states to build schools, modernize infrastructure, clean the environment, train new teachers and rebuild the Gulf Coast;
- Launch an ambitious research and development initiative for discovering new sources of renewable energy;
- Nationalize health care with a single payer system using Medicare as a model.
This will require deficit spending on a large scale. The Republican noise machine will go crazy because they’re sniveling hypocrites. Long term however our tax receipts will be filled by jobs created by government and small business relieved from health care costs. States will also be in far better shape to deliver needed services on the local level. Such a plan will also renew America’s confidence that we have control over own destiny instead of hidden forces like globalization.
I realize many Democrats prefer to sit back and ride a wave of discontent to victory. Perhaps that might serve the short-term interests of Democratic politicians. Ultimately, the worm will turn against Democrats if they implement such shortsighted thinking. The Republicans won with their “had enough” strategy in 1946 only to be turned out of power in 1948.
The current political climate offers the chance to completely reverse our regressive political culture. Let’s give boldness a chance and advocate for our beliefs without apology or fear.