To tackle the deficit, sock it to the rich

By Rap Lewis

Rep. Jan Schakowsky (D-IL), a member of the federal deficit commission, has proposed a plan to tackle the federal budget deficit without weakening Social Security or socking it to workers and the middle class.

Her plan gives labor and its community allies a specific rallying point in the campaign to prevent Congress from adopting a plan along the lines of the proposal issued by commission co-chairs Erskine Bowles and Alan Simpson.

“Their proposal would have serious consequences for middle-class Americans, and that is why I cannot support it,” Schakowsky said. The Bowles-Simpson plan would cut Social Security benefits and extend the retirement age.

Schakowsky would keep Social Security benefits intact while making deep reductions in the Pentagon budget by eliminating unnecessary weapons systems and reducing troop levels. She said her plan would ensure the long-term solvency of Social Security by raising the cap on taxable income and by “establishing a modest legacy tax on wealthier Americans.”

Her plan would eliminate corporate tax breaks, end the Bush tax cuts for the wealthy, and at the same time create a $200 billion stimulus directed at tackling unemployment and creating jobs.

“Rep. Schakowsky plans to close the deficit by 2015 without doing so on the backs of America’s seniors, middle class, people with disabilities, and the poor,” said Barbara J. Easterling, president of the Alliance for Retired Americans. “This proposal will bring the deficit under control without jeopardizing retired workers.”

New revenue would save jobs

By Rap Lewis
Last year’s deep cuts in the state budget cost the state’s work force an estimated 44,000 private and public sector jobs. Further cuts could eliminate as many as 33,600 more.
The estimates are those of the Economic Opportunity Institute (EOI), the Seattle-based public policy research center.
In contrast, EOI reports, “a combination of new state taxes and federal aid to fill the state’s budget gap could save up to 33,000 jobs.”
EOI cites the estimate of economist Mark Zandi of Moody’s Economy.com that every dollar of state spending generates $1.41 of economic activity. Private sector businesses benefit from expanded state purchases from suppliers and service providers, as well as from the added dollars workers with a regular paycheck are able to spend.
Restoring public sector jobs also sustains the important public services these workers perform, from park maintenance to help for the mentally ill.
To raise the essential revenue, EOI Policy Director Marilyn Watkins says the legislature should first tax profitable multi-state or multinational businesses, keeping money in this state that otherwise would have been spent elsewhere.
Then, Watkins says, legislators should extend the sales tax to those services used primarily by wealthy individuals and profitable corporations.
In the search for revenue, Watkins also calls for close scrutiny of business tax breaks.
“From 1994 to 2008, the Washington legislature passed 185 such special tax exemptions that now costs the state $2.5 billion in every biennial budget,” she notes.

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