Tax cuts vs deficits

Are you enjoying the extra $4,000 the 2017 tax cut brought every American family?

Okay, that’s a snide Democratic slam at inflated Republican promises, but I think it’s justified before this election. While the government claims wages have increased mightily, some sources point out that inflation has also.  So Wall Street Journal headlines shout that workers have gotten the biggest pay raise in nearly a decade while Forbes and the New York Times ponder why wage gains remain slow in spite of low unemployment.

And about that tax cut paying for itself?

The deficit for the fiscal year ending Sept. 30 was $779 billion, the largest since 2012 when the government was pouring money into infrastructure to create jobs and end the recession.

Deficits don’t usually  grow in times of low unemployment.  According to the L.A. Times, the last time unemployment was this low–during the final years of the Clinton presidency–the U.S. had a budget surplus.

In a recent Reuters interview, Senate Majority Leader Mitch McConnell blamed “entitlements”–Social Security, Medicare, and Medicaid–as “drivers of the debt” and called for them to be adjusted.

He followed that up by promising Republicans would kill the Affordable Care Act if they had the votes after the midterms.

Pundits are considering whether he thought attacking healthcare would get more Republicans out to vote or encourage donors to invest in Republican campaigns.

Only a few have pointed out he was wrong.

We’ve gotten so used to attacks on entitlements that we forget they’re about 10 percent of the budget. And, according to NPR, total government spending grew at a slower rate than the economy last year–even with all the extra security costs for Trump family jaunts.  .

But spending didn’t grow enough slower to keep a 31 percent drop in corporate tax revenues from boosting the deficit.

Some say it takes four years or so for a tax cut to pay for itself.  The truth is, no Republican cut has ever paid for itself–and John Kennedy’s cut was tied to job-creating projects.

Ironically, the Congressional Budget Office estimates that 10 years from now our government will be paying more in interest than in Social Security.  That’s right–we’ll be paying more to billionaires and countries that loan to us–plus some domestic bond holders–than to 44 million retired workers.

Various polls have shown that Americans trust Democrats more when it comes to healthcare and Republicans more when it comes to the budget. The two issues, however, are intertwined.

Republicans plan to cut healthcare programs and subsidies to pay for a tax cut so unpopular with Americans that some federal tax increases got wider public support (Tax Policy Center).

Although some Republicans are in denial about their party planning healthcare cuts, the evidence is pretty clear.  In 2017 both houses of Congress passed resolutions calling for such cuts.. In June of this year the House of Representatives passed a budget plan cutting $537 billion from Medicare and $1.5 trillion in Medicaid and other health programs over the next decade. It included no future spending for the Affordable Care Act.

Now Senator McConnell has pledged that a Republican Senate will follow suit.

Hundreds of Idahoans are fighting for Proposition Two to see that working poor can have health insurance. Yet, Republicans in our legislature could easily overturn the votes of a majority.  And Republicans in our Congress can end the funding that presently makes Medicaid possible.

There’s a lot at stake in this November’s election.

Note this editorial by Judy Ferro published by Idaho Press – 2018

Idaho Democrats: Economy includes entire business environment

by Judy Ferro

When pollsters ask people which party they believe is best in certain subjects, Democrats score high on education and low on economy.

                That’s baffled me since Democratic administrations result in lower deficits and more growth in private sector jobs growth than Republican ones.   

                I think I’ve figured out why though. When Democrats address the economy, they don’t talk about taxes and tax credits, but about entire business environment—education, health, infrastructure, stability, etc.    

                Consider these statements from candidate websites.

                “Idaho’s economy needs workers who are well-trained, and who aren’t burdened by crushing student loan debt. Idaho’s workers need the quality jobs that come from being highly trained,” James Piotrowski, candidate for U.S. Representative from Idaho’s First District.

                “But profitability does not come from pinching pennies and limiting benefits. Profitability is driven by productivity. Workers are more productive when they aren’t discouraged by poverty, when they are valued and respected, and when they believe that tomorrow can and will be better,” Jerry Sturgill, candidate for U.S. Senate.

Both Piotrowski and Sturgill see workers’ education and well-being as central to the health of Idaho’s business community. It’s not a surprising view for Piotrowsk, a lawyer who actively defends workers’ rights. Sturgill, however, was head of Stoel Rives’ Idaho corporate practice and has worked with Idaho businesses, large and small.

Similarly, the 2016 Democratic platform also emphasizes workers.

“We support job creation though Idaho’s traditional economic drivers, including sustainable agriculture, mining, timber and manufacturing while expanding industries such as technology, renewable energy, and tourism.” The plank (number 2) goes on to support modern telecommunications, public infrastructure, and fair banking, lending, and investment practices. Still, job creation is the first priority.

Plank 7, focuses entirely on support for workers and business people. It calls for equal pay for women, a higher minimum wage, and the end of “right-to-work.”

Voters in Republican states are especially conditioned to think of tax cuts and tax incentives as the backbone of economic policy. Unfortunately, cuts have set up a competition among states. Even though Idaho business taxes are among the lowest in the nation, many Republicans push for more cuts every year.

Ironically, these cuts have not been found to improve the economy overall. In fact, they make it less likely states can provide the services businesses need for their operations and recruitment.

Think how different it would be if states competed in the things that really do make a difference—education aligned with business needs, strong infrastructure, and vibrant communities. Instead of racing one another to the bottom, we could all be reaching for the top.

I can sense Republicans out there wailing that these things cost and will drive up taxes. The truth is, these things cost and will create profits and tax revenue.

It’s called investing. If companies lack the vision and courage to pay up front for worker training, equipment, and plant facilities, businesses don’t grow. Similarly, states create thriving economies by investing in education, infrastructure, and community development.

Idaho still hasn’t recovered from cutting education by over 20% to fund tax cuts in 2009 and 2010. Investment in higher education, essential in driving innovation and advancing skills, still hasn’t recovered. Ironically, small Idaho businesses ended up paying both higher Federal unemployment taxes and local school taxes.

If you look at states with average wages at or below Idaho’s, you’ll see many citizens smugly proud of their Republican governors and legislators holding the line on spending—while relying on Federal subsidies paid for by those in Democratic states.

Idaho politics: Plus Two, Minus Two–We could do better

by Judy Ferro

Now that pundits have passed judgment on the Idaho legislature, it’s a good time to see if we can learn from other states’ experiences.

Kansas legislators may have set this year’s record for hubris. Lawmakers there considered a bill that would make it an impeachable offense for state Supreme Court justices—and other state officials—to “defy” the legislature.

Of course, they had reason: in March the Kansas Supreme Court ruled that years of budget cuts had left schools “inequitably funded” and ordered that K-12 schools not open next fall unless the legislature remedied the situation. Legislators did buckle down and adopt a formula they claim funds the schools more fairly; critics, however, claim it makes matters worse by funneling money to districts most able to support local levies.

This is just the latest drama resulting from the huge income tax cuts that Gov. Sam Brownback championed in 2013. Exempting 330,000 farmers and businessmen from state income taxes was supposed to boost the economy so fast that the state’s revenue would not be cut. Instead, the deficits went from $344 million the first year to a predicted $800 million this year.

So now Brownback is claiming that his tax cuts worked but proposing increasing the sales tax to 6.65 percent, the cigarette tax to $1.29 a pack, and business taxes by an overall $24 million.

Louisiana is in worst shape. Tax cuts enacted when Bobby Jindal was governor will leave the state about $1 billion short this fiscal year and a predicted $2 billion next.

Idahoans have to appreciate that this year, at least, our legislature chose to fund schools rather than give the rich more tax cuts.

And, although our legislature forbade local governments from passing legislation banning plastic bags and regulating oil exploration, it did not overthrow the ordinances of cities that ban discrimination on the basis of sexual orientation and/or gender identity. North Carolina did and is feeling the fallout.

Just weeks ago Gov. Pat McCrory stated that he didn’t know of a business that had a stand one way or the other on gay rights. Now he has heard from 120 CEOs and businesses opposing the law. Pay-pal has cancelled plans for a facility that was to employ 500 people. A television pilot is filming in Canada instead; the NCAA is under pressure to leave the state; and lawsuits have been filed.

So Idaho has twice dodged bullets by not jumping on the far-right bandwagon. Unfortunately, it continues to shot itself in the foot by rejecting Medicaid expansion and a minimum wage increase.

A recent Colorado study has indicated positive results from Medicaid expansion far greater than predicted. Estimates are that expanding healthcare created 31,074 new jobs and added $3.8 billion in economic activity. It’s hard to compare Colorado with Idaho—its population is three times and its economic production four times as high as ours. Still, it is impressive growth and Idaho needs it.

And the evidence continues to grow that raising the minimum wage boosts a state’s economy. Job growth in Washington, Oregon, and California continues to outpace ours. Opponents of an increase cite anecdotes (my boss laid off people when the minimum wage increased) and cherry-pick statistics (employment for urban dwellers between the ages of 16-19 went down), but study after study indicates incremental increases in minimum wage boost an economy.

The Republican propaganda machine is wrong. Democratic policies benefit the middle class and lead to healthy economic growth.