Tax the Rich; Spend on the Material and Educational Needs of the Less Well-Off

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Pat Simpson

Pat Simpson is a labor educator who is active in Central Illinois Jobs with Justice

As the old year drew to a close, the walls of the Channing Murray Foundation echoed with speeches on the topic of the then unresolved federal budget negotiations. Central Illinois Jobs with Justice (CIJWJ) had organized a press conference for the afternoon of Dec. 14, 2012 in the Chapel at Channing Murray. Featured speakers at this event included representatives from CIJWJ and from the Campus Faculty Association, the Campus Labor Coalition, Champaign-Urbana Citizens for Peace and Justice (CUCPJ), the Channing Murray Foundation Social Action Committee, the Peace and Service Committee of U-C Friends Meeting, Service Employees International Union Local 73, the Social Action Committee of the Unitarian Universalist Church of Urbana-Champaign, and Socialist Forum.  One by one, the speakers elaborated on their organization’s motivations for endorsing a six-point resolution calling for increased tax rates on the wealthiest Americans and significant cuts in military spending, while demanding preservation of the country’s social safety net and maintaining spending on education and “green” job creation.  Upon the conclusion of the press conference, copies of the resolution including the names of its signatory organizations were sent to President Obama and the majority and minority leaders of the House and Senate.

Organizers of the press conference noted that there would have been a longer list of endorsers, but several contacted organizations had had no meetings of appropriate authorizing bodies scheduled in the early weeks of December.

David Johnson, Staff Coordinator for Central Illinois Jobs with Justice, reminded the audience that alternative actions were still possible.  “Call Senators Durbin and Kirk and Representative Johnson,” he urged.  “Tell them that cuts to Social Security, Medicare, Medicaid, and other social safety net programs are simply not acceptable. Urge your friends to call, too.”

Other speakers echoed Johnson’s words.  Bobbi Trist of the Quaker Peace and Service Committee talked about how Social Security was essential to the ability of her childhood family, headed by a widowed immigrant from Europe, to survive the Great Depression.

Ricky Baldwin of SEIU Local 73 talked about how Social Security, a universal social insurance program, has not contributed “one penny” to the federal debt and that even in a worst-case scenario, the program will be able to cover 100 percent of its obligations through 2033.

Belden Fields, representing CUCPJ, noted that in addition to cuts in military spending, dramatic cuts could be made to the draconian and highly unsuccessful war on drugs.  “Not only has the extraordinarily expensive war on drugs been unsuccessful,” commented Dr. Fields, “but it has had an extremely devastating and disproportionate effect on black communities throughout the country.”

This press conference was but one example of intensive mobilization efforts sponsored by progressive groups and their allies throughout the country to influence the budget negotiations.  It has become increasingly clear since 2008 that left to their own devices and without grassroots pressure generated from below, most members of the Democratic Party – to say nothing of Republicans – are only too willing to serve the interests of corporate and elite groups who contribute so heavily to election campaigns and stand like Colossuses over the Washington lobbying process.  Even progressives who had voted for President Obama in the recent election knew that he and most Congressional Democrats had a history of being only too willing to sacrifice the country’s social safety net – and the poor and working-class populations that depend on them – in response to calls to reduce the federal debt.  They knew, for example, that Obama appointed former Senator Alan Simpson and Morgan Stanley Director Erskine Bowles to head a federal deficit commission. These two have contributed to misguided hysteria about the solvency of Social Security and have put forward recommendations that would effectively lead to benefit cuts and delays in access. Nearer to home, Senator Dick Durbin had made repeated statements in recent years that he was inclined to accept many of the recommendations of Simpson-Bowles. More importantly, in the earlier round of negotiations on the federal budget that led to the so-called “fiscal cliff” deadline, Obama broke his promise to adopt a balanced approach to the federal budget and accepted deep cuts in social programs while not securing any new revenues through increased taxes on the wealthy.

For now it seems that the mobilization efforts paid off.  After rumors that the Obama Administration was considering raising the Medicare eligibility age to 67 and cutting Social Security benefits by roughly 3 percent by changing the indexing formula for cost-of-living increases, phone call and petition campaigns from organizations like CREDO, Progressive Change Campaign Committee (PCCC), MoveOn, Democracy for American (DFA), and Color of Change, as well as the independent efforts of many private citizens, intensified.  The result is that the deficit deal cut just before the New Year deadline does not include any modifications to Social Security or Medicare.

The deal also includes some modest increase in tax revenues.  Income tax rates will increase to Clinton era rates for households with incomes of $450,000 and above. The estate tax will also rise from 35% to 40% on estates over 10 million.  Obama will argue that he fulfilled his campaign promise of 2012 with regard to taxes on the wealthy, but in fact he specifically promised to secure tax increases on those making $250,000 and above, so the final deal is well below target on this score.  Many critics also point out that the final deal makes the Bush tax cuts permanent.  Thus, those making $450,000 and above now will pay $9,200 per year less than they paid before the Bush tax cuts and it will take a new  “affirmative” act of Congress to undo this handout.  A similar argument can be made about how the deal treats the estate tax.

To make matters worse, while the income tax rates for those making less than $450,000 will also remain at Bush-era levels, the payroll tax “holiday” that had been in place for the past two years has been allowed to expire. As this tax cut reduced the typical wage earner’s regular payroll contribution to Social Security by 2%, wage earners will be bringing home smaller paychecks starting in 2012.  It is true that any reduction in payroll taxes necessarily has a negative impact on the Social Security trust fund, but the timing of the expiration of the tax cut could have an anti-stimulus impact on an economy that still teeters on the brink of recession.

The deal is also deeply problematic in that it did not address the debt ceiling and put off for only two months the sequestration that will lead to deep cuts in social programs.  It thus set up a situation where Republicans can use the issue of raising the debt ceiling as leverage in their future efforts to secure cuts to the social safety net. Obama has said that he will not negotiate over the ceiling and has even mentioned using the exceptional practice of minting coin to avoid such a fight.  But we have seen Obama break promises before.

The lesson is clear.  If programs and institutions that have long been vital to the social and economic welfare of the American majority are to endure, the breadth and scope of citizen engagement in politics cannot be limited to voting for our “best hope” or “the lesser of two evils” and then beating a fast retreat. Rather let’s be reminded of what Franklin Roosevelt once said to Sidney Hillman and other labor leaders, many of them active Socialists.  It was 1932 and shortly after Roosevelt’s election.  The labor leaders arrived with plans they wanted Roosevelt to implement.  Roosevelt’s response was: “I agree with you, I want to do it, now make me do it.” In short, this is no time for mourning the very imperfect New Year’s budget deal, pick yourself up, dust yourself off, and get busy – very busy.

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