Is the Republican deficit hysteria just another right-wing ploy to defund social programs? Joseph Schwartz, Professor of Political Science at Temple University, takes a look at the facts and answers—YES!. In a recent post on Daily Kos, Schwartz makes the following points:
The United States is not broke. The long-term deficit problem has not been caused by wasteful social spending, as the right contends, but by conservatives’ thirty-year project of starving federal, state and local governments of revenue via tax cuts for the affluent and for corporations.
[W]ell over half of the deficit spending from 2008-11 has nothing to do with the Obama administration’s policies. Rather, it is due to the lost revenue from the Bush tax cuts and excessive military spending, including $170 billion per year in “off-budget” expenditures on the unnecessary wars in Iraq and Afghanistan.
The Bush and Reagan tax cuts--which distributed 80 percent of their benefits to the top ten percent of income earners--each cost the federal coffers 2.1% of GDP in taxes per year, for a combined total of $600 billion a year in lost revenue. If we returned effective tax rates to the level of 1960, the federal government would take in $400-500 billion more dollars.
In 1960, corporate taxes constituted thirty per cent of federal tax revenues; today, corporate taxes only make up seven per cent of federal revenues. Thus, returning marginal income and corporate tax rates to those of the Eisenhower era would immediately eliminate most of today’s $1.2 billion federal deficit! Even if we can only reverse the Bush tax cuts on the most affluent 2 per cent (which would yield $70 billion a year in extra revenue) and abolish federal tax expenditures on corporations (such as the oil depletion allowance and the corporate exemption from having to pay taxes on foreign earnings) this would bring in $120 billion per year in revenues. Instituting a modest financial transactions tax of 0.25% on stock, bond, and derivatives trading – the level proposed by the European Union- could bring in another $200-300 billion per year.
The conservative propaganda machine claims that federal and state governments waste huge amounts subsidizing poor people. Yet income support and anti-poverty programs such as Head Start, Food Stamps, and Supplemental Security Income constitute only fourteen percent of the federal budget.
Cash transfers in the U.S. for unemployment insurance, Social Security, day care subsidies and the like amount to only 9 per cent of household disposable income, by far the lowest among the industrialized nations except South Korea. And we also rank next to last among the rich industrial countries in terms of social transfers that benefit the poor. In contrast, we rank first in tax subsidies for the affluent and for corporations.
If we instituted a single-payer Medicare-for-all policy that eliminated the role of private health insurers, we could lower the 25% of private health care dollars spent on health insurance company administration and advertising to Medicare’s seven percent administrative costs.
The next time a Republican/Tea Party nut case starts preaching to you how out of control spending is bankrupting the country, show him this post. Or, better yet send him to Schwatz’s original post here:
Once again: We have a REVENUE problem, not a SPENDING problem. If we fix the REVENUE side of the ledger, we can solve the so-called deficit crisis.
Also, if you want some good ideas for getting the country back on track, take a look at the People’s Budget, here: http://grijalva.house.gov/uploads/The%20CPC%20FY2012%20Budget.pdf
It achieves a budget surplus AND brings debit to below 65% of GDP by 2021 WITHOUT abandoning social safety net programs and destroying Medicare and Social Security.