The Need To Cut Spending...Later

As deficit reduction talks continue there are rumors that spending cuts agreed to by Democrats and Republicans could exceed $1 trillion, it has been cited that this would be the largest amount of cuts on record.  This number was agreed to prior to Republican Congressional leaders Eric Cantor and Jon Kyl walking away from deficit reduction talks that I wrote about in a previous post.  According to recent reports there still has been no serious discussion on revenue increases in the form of closing tax loopholes and ending tax credits for those who no longer need them.  As I've stated previously in multiple posts I agree that we must address spending, but now is not the time to do so.  Obviously I don't expect you to just take my word for it, after all I am not an economist nor have received any education in the field beyond a few basic economics courses.  I have arrived at my opinion base on what I've read and listened to from those who are economists and do have substantial education in the field of economics.  What I'm more excited about is that now I actually have reports that support what I've been saying, within the past few weeks the Congressional Budget Office and the Center on Budget and Policy Priorities have both release reports warning against cutting spending while the economy is still recovering.  I hereby present them to you for your consideration.

The Center on Budget and Policy Priorities released a report on June 28th warning that deeper than necessary cuts states are making harm the economic recovery and their long-term economic interests.  This report also warns against cutting funds to these cash-strapped states and proposes continuing emergency Medicaid payments to states as needed.  You'll notice a theme to what cuts states are making as outlined in the report, they are gutting education and Medicaid while not addressing losses in revenue. 

This is a short 5-page report that is written in layman's terms, I encourage you to read it:

New Fiscal Year Brings Further Budget Cuts to Most States, Slowing Economic Recovery, Center on Budget and Policy Priorities, June 28, 2011

The Congressional Budget Office released their 2011 long-term budget outlook a few weeks ago and also warn against enacting large spending cuts while the economy is still in recovery.  After stating that enacting large spending cuts now would harm economic recovery the report goes on to say "However, the sooner that medium and long-term changes to tax and spending policies are agreed on, and the sooner they are carried out once the economy recovers, the smaller will be the damage to the economy from growing federal debt" (emphasis added).  So debating cuts now is recommended, but they are warning against enacting them just yet.

You can read the 4-page summary report here:

CBO's 2011 Long-Term Budget Outlook Summary, Congressional Budget Office, June 2011

If you hunger for more charts, graphs, and economic speak you can read the full 108-page report here:

CBO's 2011 Long-Term Budget Outlook, Congressional Budget Office, June 2011

I am not saying that we don't need spending cuts, as both of these reports demonstrate our current revenue and spending levels are unsustainable, but the economic recovery is delicate and enacting large spending cuts now would be devastating.  I haven't heard a single member of Congress from either party say that we don't need cuts, that is an unrealistic position, but almost every single Republican member of Congress says that we shouldn't "raise taxes" which is an absolutely ridiculous position to take.  First, nobody involved in the current deficit reduction debates has proposed raising taxes on anybody as far as I'm aware, what they have proposed is ending certain credits and closing tax loopholes.  Closing these loopholes and ending credits isn't "raising taxes" it's reducing spending through the tax code, these types of tax benefits are spending policies and should be subjected to cuts just like any other spending.  According to the Rachel Maddow Show on MSNBC Exxon Mobil makes a profit of $5 million per hour (you can see the video here along with how much they made in profit as she was speaking), do they really need their tax subsidy?  Do corporations who are doing better than middle-class America really need a tax credit to buy private jets while at the same time states are slashing education and asking our seniors and the disabled to pay more for their healthcare?

Solving our long-term deficit problem will take a balanced approach to include spending cuts and revenue increases, not just one or the other.  The faster our economy recovers and the faster we can get people back to work (both of which will probably require the government to temporarily spend more money) the faster we can enact deficit reducing solutions.  But we need to take it one step at a time, these are completely separate issues that you can't just lump together or find a singular solution for.  Step #1:  Spend whatever it takes to get America back to work.  That's why Republicans were given control of the House, because they campaigned on being able to create jobs better than the Democrats, it's July and there still hasn't been a jobs bill.  Instead they've misread and/or used the election results as an excuse to cut Medicare, education, collective bargaining, and draft legislation that gives the government more control over your personal life.

I wanted to end with a link to a Newsweek article written by former President Bill Clinton on June 19th.  In it he lists 14 ways to put America back to work and considering he oversaw the largest peacetime economic expansion in US history it might behoove members of Congress and President Obama to consider some of these ideas.

Taxpayers Infringe Corporate Speech According To Court

On Monday the US Supreme Court ruled in favor of large anonymous campaign contributions in a 5-4 conservative majority ruling on Arizona Free Enterprise Club's Freedom Club PAC et al. v Bennett, Secretary of State of Arizona et al.  This ruling essentially gives privately funded candidates greater speech over publicly funded candidates.

In 1998 the people of Arizona voted on and passed the Arizona Clean Elections Act providing candidates who opted out of private campaign financing a public grant.  This Act would also provide additional grants if the candidate was outspent by a privately funded opponent to help keep a level playing field.  This Act was put on the ballot in response to corrupt campaigns that had occurred previously in an attempt to make a cleaner system.

The US Supreme court has now ruled against this law, more specifically the "trigger" mechanism of the law that allows for additional grants to help keep the candidates financially even.  The court is arguing that these additional grants infringed on the speech of private donors.  I don't think that anybody was surprised by this ruling as the same conservative judges that brought us the Citizen's United ruling arguing that corporations were citizens and could give unlimited contributions to campaigns.  We saw the effects of that ruling in this most recent election where not only can corporations, groups, and even other countries donate to political campaigns they can do so secretly through 3rd party groups (Super PAC is a term you'll hear a lot of come 2012).

Obviously the Arizona Clean Elections Act in no way, shape, or form infringes upon the speech of private donors.  Nothing in the law restricts how much a privately funded candidate can raise, it just allows for a publicly funded candidate have a similar level of funds.  It doesn't even provide for the publicly funded candidate to receive equivalent funding as there are restrictions as to what percentage of the public campaign finance pool can be used during an election cycle.  The Act was intended to provide incentive for candidates to forgo private funds, which can be secret and unlimited, in hopes to make elections more transparent and fair.

The people of Arizona lost on Monday, they were victims of a corrupt system and were smart enough to recognize that and passed a law to help clean up elections and ensure their voices were heard instead of being drowned out by corporate dollars.  But the conservative members of the Supreme Court overruled the people of Arizona and continued the work they started with Citizen's United to ensure that corporations and other interests were able to play a larger role in our elections and essentially allows them to buy and intimidate candidates and politicians.  We know corporations are funding our elections, but maybe they're buying members of the Supreme Court as well, maybe we should ask Justice Thomas.