The second installment in a two-part series on U.S. fiscal policy.

Crunching The Numbers: Part II
A Democratic Fiscal Policy For A Democratic Era

Okay, here’s the good stuff. In Crunching The Numbers: Part I (August 24, 2004), I argued against the thoroughly Republican policy of cutting taxes and domestic spending and jacking up useless defense expenditures. So obviously, I’m not going to include any of that in a Democratic fiscal policy for a Democratic era. Indeed, what I argue for is the exact opposite.

Let me start off by explaining that fiscal policy accurately reflects a given vision of government. (Note: For this column, whenever the word “government” appears by itself, assume that I’m referring to the federal government. Though I do think that domestic tasks should be taken care of by government at all levels – federal, state, and local.) My vision for the federal government is an active, efficient and powerful institution that is eager to provide for domestic programs that benefit all Americans and the general welfare of the United States, while respecting the personal rights of individuals and the sovereign rights of foreign countries. I believe that this is the general philosophy of the Democratic Party as a whole.

This means a number of things. First of all, I strongly encourage increases in spending on domestic discretionary programs as well as entitlements. Entitlements are programs whose spending is determined by a certain set of qualifications, and cannot be controlled directly by Congress. (Examples being Social Security, Medicare, and Medicaid) Domestic discretionary programs are programs whose funds are determined directly by Congress and the President. (Examples being housing, medical research, transportation, etc.) I support increases in both because I truly believe that the federal government has both the resources and duty to provide for the common well-being of the country, and increases in spending allow for just that. At the very least, the government should maintain the amount of funding, if increases are not possible due to political or budgetary realities. Granted, throwing money at something isn’t always going to work (which is why I support the federal government getting involved in more ways than money, i.e. guidance, strategy, research, etc.) but, face it, money is the gasoline that fuels the world. Money in itself doesn’t guarantee success, but a lack of money most definitely guarantees failure.

I support healthy funding for just about every federal domestic program. The list includes entitlements like Social Security and Medicare, homeland security, housing, health care, education, job training, anti-poverty programs, transportation, sewage and public health, land and community improvement, energy and the environment, the Postal Service, public media and broadcasting, science and technology, the humanities, culture and the arts, and many other areas and issues I can’t think of right now. The federal government should be responsible for allocating funds to expand and maintain programs for these areas, and even if the United States is doing well in all these areas, the federal government would and should still have to spend a reasonable amount of money to maintain excellence in those areas. Maintenance as well as expansion is the key.

Probably the only area where I don’t like seeing more spending is the Department of Defense. It’s not that I don’t care about protecting this country; indeed, defending the country is one of the most noble and righteous causes the federal government can be asked to take on, and that’s why I support increased funding for the Department of Homeland Security (preferably with funds that would have gone to Defense instead). I don’t like seeing Defense getting more funds because, quite frankly, Defense doesn’t really handle actual defense of this country anymore. Instead, the DOD is charged to go abroad and instigate unnecessary and unprovoked military operations with foreign nations like Vietnam, Grenada, Panama, Kosovo, and of course Iraq. Do I think that there were problems in all these countries that needed to be solved? Of course; I’m just not sure if war was the answer to any of these conflicts. Wars are expensive – and so is the Department of Defense, for that matter. Because all this Defense money is going to unnecessary, expensive wars abroad, I think the money is being wasted and I prefer to see it going into Homeland Security instead.

Finally, after hearing all this talk about spending money, you’re probably thinking what I’m thinking: how are we going to pay for all this? Well, the government doesn’t make a lot of money by itself, so the only answer is through taxes. And that’s why I adamantly oppose tax cuts. Especially of the Bush variety, which disproportionately benefit the rich (see Part I for details). Demand-side tax cuts that go mainly to the lower-income brackets (like the ones advocated by President John F. Kennedy) are okay by me. But I do support the full repeal of the Bush tax cuts (with three exceptions – the expanded 10 percent income tax bracket, the marriage “penalty” compensation, and the child tax credit) so that we can fund programs that help everyone, not just the rich. And yes, I think President Bill Clinton did the right thing when he raised taxes across-the-board to fund domestic programs, lower the deficit, and produce a fabulous period of economic growth.

When we talk about taxes, all the focus tends to be on income taxes, partly because that’s the one where the rich pay the most. Well, there are two other types of tax out there that hurt ordinary people even more and they’re the payroll tax and the sales tax. I support payroll tax cuts on lower- and middle-income brackets (because they’re the ones hurt most by it) and busting the cap that currently keeps upper-middle and wealthy Americans from having to pay any payroll taxes. That’s quite unfair; all Americans should have to pay at least the taxes that fund Social Security and Medicare because those programs are open to all senior citizens, regardless of wealth. And the sales tax discourages consumer spending (which is what drives economic growth) and hurts poor and middle-income people the most. Thank goodness there’s no national sales tax (and I do oppose it) and I would lower it at the state level.

One last note: Small, short-term deficits are necessary from time to time. Big, long-term deficits are bad. I wouldn’t call myself a deficit hawk, but I abhor deficits of the big, long-term (Republican) kind because they divert taxpayer money away from actually providing for the country and render the government impotent and incapable of doing much of anything. I can understand if a deficit results from domestic spending or a national emergency, but the deficits that have run under both Presidents Ronald Reagan and George W. Bush, which result from massive tax cuts and wasteful military spending and unnecessary wars, are completely inexcusable.

I can safely say that most Democrats would agree with just about everything I’ve wrote. At least I hope so. Otherwise, that would mean they’ve drifted more to the right than I’ve imagined. All the facts and my observations say otherwise, though; the tenets behind the basic policies I’ve just outlined have been espoused by Democrats from Franklin Roosevelt to Bill Clinton. I trust that Democrats embrace this philosophy and are happy to run with it. Here’s to a Democratic era of high domestic spending, low defense spending, low deficits, and healthy economic growth and revenue flow. Once we take back the White House and Congress and the people are behind us, this era I speak of will come.

The first installment in a two-part series on U.S. fiscal policy.

Crunching The Numbers: Part I
The Republicans Screw Up – Big Time

I’m going to talk about one of my favorite subjects in politics, fiscal policy – the policy of how much, and where, the government taxes and spends. Fiscal policy is incredibly important because, face it, in this world money makes things happen. Money is like the gas government runs on. Generally speaking, you can accurately show how much you care about certain cause by how much money you want to put into it. Of course, there are exceptions – a $10 toilet seat works just about as well as the $500 ones the federal government has been reportedly using – but in general, it’s true.

I’ve written a number of pieces on fiscal policy for El Estoque and The Truth About Politics, the newsletter of the Monta Vista Democrats. Unfortunately, I have never seen any of these pieces reach the light of day. The good news is that I have realized what was wrong with those pieces: They were too big. As a result, the editors complained and I had to excise a lot of juicy good stuff. Well, now that I’m my own goddamn editor, I’m gonna still keep size in mind but I’ll split the column in two. Part I will deal with the current Republican road to ruin; Part II will discuss my Democratic deal for da future (damn, couldn’t make an alliteration out of that one. Eh, came close though.)

Where was I? Oh yeah, the Republican road to ruin thingy.

If you remember the 2000 presidential campaign (which I’m sure you don’t, because I can barely remember it myself), the Democrat, Vice President Al Gore, was proposing splitting a projected $5.6 trillion budget surplus (meaning we would have had that much extra money to spend, in the near future) between paying off the national debt and increased public spending. The Republican, Texas Governor George W. Bush, wanted to use half of it for paying off the debt, a quarter of it for increased public spending (mainly on education and faith-based baloney), and a quarter of it for a $1.6-trillion tax cut primarily geared towards the rich. Guess what? After Bush won the election by the skin of his ass, his gigantic tax cut passed Congress in late May 2001, its delivery greased by a few traitor Democrats. It was married to a budget deal that pared back spending in numerous domestic areas, including many programs for housing, the poor, the environment and energy, and community development. (Source: Center On Budget and Policy Priorities, August 3 2001, http://www.cbpp.org/8-3-01bud.htm). Sadly, most Democrats back then were still too busy trying to figure out how Bush became President in the first place to mount any credible opposition.

The tax cut was bad for a number of reasons. First of all, it was geared primarily to the rich. Forty-three percent of Bush’s proposed tax cut would have gone to the top one percent in income. It was only because of the U.S. Senate (which was, at the time, split 50-50 between the two parties and had a few Republican moderates) that the final tax cut gave *only* thirty-seven percent to the top one percent, instead of the planned forty-three. (Source: Citizens for Tax Justice, May 26 2001, http://www.ctj.org/html/gwbfinal.htm) The second problem was that the surplus that Bush was relying on was a projected surplus – meaning that if things stayed the same, it would materialize. If anything, Bush should have waited a year – 2002 – for that fat surplus to arrive before passing his tax cut. But no, he didn’t, and as a result the tax cut delivered not huge economic growth, but an enormous federal deficit (debt) – $4 trillion this year and growing – that effectively reversed the hard work and enormous political capital that Presidents George H.W. Bush and Bill Clinton put in towards deficit reduction.

And not only did Bush cut spending in the budgets themselves, the deficits that his tax cuts built up virtually guarantee that any new spending proposals will be stymied by that all-consuming deficit. This very conservative Republican strategy of “starving the beast” relies on a burgeoning federal deficit to block any new spending proposals and eventually force cuts on domestic programs, including popular ones like Social Security and Medicare that Republicans are afraid to touch now. Speaking of which, with the baby boomer generation ready for retirement in ten years, we are on sore financial footing to provide the same kind of benefits to them that they provided to their parents.

Anyway, now President Bush and the Republicans are now pushing to make the tax cuts permanent, meaning that not only will this vision of starving the beast + the death of Social Security be that much closer to becoming reality, but that the goal of crippling the federal government for decades to come will succeed, with devastating consequences for this country.

But back to those spending cuts. They actually look like small increases if you take the dollar amount, but when you factor in inflation and population growth – two conditions that Bush himself has insisted on in the past – they are quite underwhelming. For example, in the 2002 budget, non-Social Security/Medicare/Medicaid, non-defense, non-education programs supposedly got an increase of 3.1 percent. Throw in the inflation and population growth, though, and instead you see a decrease of 0.7 percent. The only programs that get a real increase are education (which the Republicans continually underfund anyway) and defense. (Source: Center On Budget and Policy Priorities, October 19 2001, http://www.cbpp.org/10-19-01bud.htm)

The trend of huge tax cuts, large defense spending and cutting domestic spending continued past the 2002 budget to 2003, 2004, and now 2005. The 2004 budget, for example, contained $1.3 trillion in tax cuts over ten years, reduced domestic spending by $7.2 billion from the previous year (with the inflation adjustment), and increased defense spending by $2.0 billion. It also places caps (limits) on domestic spending, ensuring that any measure to significantly increase spending would be stymied. (Source: Center On Budget and Policy Priorities, April 17 2003, http://www.cbpp.org/4-16-03tax.htm)

All this is a bad formula. Although part of my argument is philosophical (which I’ll lay out more in Part II), part of it is based on pure common sense. Large defense expenditures are being used to fund illegitimate wars like the one fought recently in Iraq. What we should spend money on instead is actually going after al Qaeda (remember them?) and beefing up homeland security. I’m not an expert on military budgeting, but I’m sure that operations to destroy al Qaeda cells and assassinate al Qaeda leaders wouldn’t cost nearly as much as the money required to build up troops, invade Iraq, occupy it, and rebuild it. That takes a lot of money, which brings me to my next point.

To cut taxes while going to war and rebuilding a shattered country on the other side of the world is simply irresponsible. That’s like throwing away your life savings (to some family friend that can pull some strings and get you that dream job) and then borrowing money to pay for a new mansion. It makes no sense whatsoever, and because of this nonsensical plan we not only face huge spending cuts (mostly on programs that benefit the masses – the middle-class and especially the poor) but also huge deficits.

But why are deficits so bad? Simple. Large, long-term deficits will 1.) Effectively starve the government and basically render it impotent 2.) Eventually force cuts in popular programs like Social Security and Medicare 3.) Mean that more and more of the taxes you and I pay will go into paying off a debt instead of actual programs that benefit the country 4.) Mean that somewhere along the line, to get rid of the deficit, the government will have to either charge the mother of all tax hikes or the mother of all spending cuts. Either way, it won’t be pretty – and it’ll be the ordinary American that suffers.

The important thing to remember that this policy for disaster is not specific to President Bush, or to today’s Republicans. The Republican Party has always been about keeping the federal government in a straightjacket ever since President William McKinley took office in 1897. The years of 1995 and 1996 were basically one huge showdown between those who would keep government small and feeble (the Republicans, led by Speaker Newt Gingrich) and those who want a strong, active government (the Democrats, led by President Bill Clinton). Luckily, the Democrats won in that round – but who will come out on top in this one?

Summer 2004 Update IV

Well this is going to be the last Summer 2004 Update, because Summer 2004 is bloody over.  But I’m getting ahead of myself.

Just to clear up some things from previous Updates: Yes, I dropped the Calculus class, though for that I had to endure some mind-numbing lectures from my tutor. (I think Update I explains that.) My efforts with the girl from Update II went downhill – but I won’t go too much into that.  And weight training?  I was doing lat pulls one day and some teacher came up to me and told me I was doing an outdated exercise.  She then asked me what class I was in and, yes, I could do nothing but reveal that I wasn’t signed up in any class.  My permanent ban from the De Anza gym followed.

The week that followed saw me packing frantically.  Yes, I moved to Hayward, of all places.  I’m not going to get into all the details; suffice to say that we have a nice, new big house there and I’m here now.  The problem is, my parents decided they wanted new carpet, among other things, and so for a week, while the second floor was being recarpeted, we had to all camp out on the family floor.  Aww.  Because of all the chaos surrounding the move, I wasn’t online for two weeks.

To make my life more interesting, I went to look for a job and I actually found one.  It was relatively easy too.  A nonprofit environment group called Environment California needed people – badly.  So I interviewed and was hired on the spot.  The office I work out of, in downtown Berkeley, basically raises money by going door-to-door.  Canvassing, it’s called.  It isn’t exactly quite cost-effective in terms of time and effort – for five hours and a lot of walking I usually only get at most five people to contribute – but we do raise large sums of money, which goes towards research, public education on environmental causes, and most importantly, a campaign to get Sacramento to pass stricter ocean protection.  The job pays and it’s for something I really believe in, the environment, so it’s good.

The problem is, my new location in Hayward obliges me to go to the local comm college, Chabot College, and unfortunately they work on semester system so class starts, well, tomorrow.  And the Environment California campaign I’m working with doesn’t end until Friday, August 27.  So there’s a week where I’m working and schooling.  It gets even more complicated because on the 30th, a fall campaign – with different hours – starts, so because of the differing hours there’s no way I can do both campaigns and have enough time to go to class. (Did I mention I have to be on the job from 1 to 10 at night?) So I’m probably going to leave at the end of the current campaign – I’m in the thick of it anyway and I feel too committed to leave – and maybe get a part-time job (I’m angling for a bookstore right now) that has more manageable hours, in the fall.  The downside is that I’ll only have worked with Environment California for ten days. 

Well, it looks like it’ll turn out alright in the end.  One thing’s for sure: I started Summer 2004 with one set of expectations, and there’s no way I could’ve expected it to end as I did.  And I mean that in both good and bad ways.

Summer 2004 was good.  Sorta.  Here’s to a better summer next year.

 

Btw, I’ve finished a two-part column on U.S. fiscal policy.  Expect Part I in the next few days, and Part II by the end of the week.