Budget Deficits

  • April 10, 2012

    by Jeremy Leaming

    A Washington Post front-page headline declares that the Affordable Care Act “will add $340 billion to deficit, new study finds.” It’s an eye-catching title, especially in light of the Congressional Budget Office’s assessment that the law would lead to a decline in the deficit.

    Jonathan Chait writing for Daily Intel says The Post’s article is hardly the blockbuster story it is dressed up to be.

    For starters there is no such study. Instead, Chait points out that The Post is actually talking about a partisan paper “published by the Mercatus Center, a Koch-funded organization that produces some quality work as well as a fair amount of schlock that does not meet the standards of your typical university economics paper. This paper is an example of the latter.”

    The paper, by Charles Blahous, a research fellow at the Koch-funded organization and former Bush administration official, relies, Chait writes, on a simplistic conceptual trick producing a “bizarre assumption” that the new health care form law can only add to the deficit because of new spending.

    The White House has also weighed in on The Post’s coverage of the Blahous paper. Writing for The White House Blog, Jeanne Lambrew blasts the paper for promoting a false claim, and cites the work of the CBO and the Office of Management and Budget, which projects “lower Federal budget deficits as a result of the law.”  

  • July 12, 2011

    Jonathan Rauch, in a guest post for The Dish by Andrew Sullivan, joins the discussion over a constitutional solution to the ongoing struggle in Washington to reach a deal to allow the nation to continue paying its debts. He writes that since conservatives are dismissively responding to “the 14th-Amendment option,” be believes there might be something to it.

    Rauch states:

    As you have probably heard, the 14th Amendment says, "The validity of the public debt of the United States...shall not be questioned." In a post-Civil War context, the amendment's framers sought to prevent some political faction—at that time, the South—from refusing to let the government repay its debts. The basic idea of not letting politics hold the debt hostage is certainly relevant to what's happening today, although obviously the situation is different. In any case, whatever the particulars of the amendment's adoption, it clearly suggests that meeting our debt obligations is a constitutional imperative, not merely a statutory one. Otherwise, of course, the amendment wouldn't be there.

    As noted in this post, leading constitutional law experts, such as Harvard’s Laurence H. Tribe and Yale’s Jack Balkin have weighed in on the 14th Amendment and the budget crisis.

    In his column for The New York Times, Tribe writes:

    The Constitution grants only Congress — not the president — the power “to borrow money on the credit of the United States.” Nothing in the 14th Amendment or in any other constitutional provision suggests that the president may usurp legislative power to prevent a violation of the Constitution. Moreover, it is well established that the president’s power drops to what Justice Robert H. Jackson called its “lowest ebb” when exercised against the express will of Congress.

    But Rauch says the “dismissers” of the 14th Amendment option are acting, well, too dismissively.  

    “When push comes to shove, therefore, and August 2 or some other drop-dead date comes around, does the 14th Amendment trump the debt-limit statute? I would think so,” Rauch writes. “At a minimum, it gives President Obama a compelling case to keep servicing the debt. After all, in the current environment, even a temporary default could have severe economic consequences. Worse, it might be one of those moments in a country's history that frame a turning point in the narrative. "Deadbeat U.S.A.!" Reversing the damage to the country's psyche and image might take years, or forever. Lemme tell you, China isn't about to default.”

  • April 18, 2011

    Culling through the most recent data from the Internal Revenue Service, The Associated Press notes what many economists have already taken note of: the nation’s wealthiest continue to see their tax burden decline.

    The AP reports that the IRS “tracks tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.”

    If the Tea Party-backed politicos in the U.S. House of Representatives had their way, the tax burden for corporations and wealthy individuals would continue to lessen. A few days ago the House passed a 2012 budget plan pushed by Rep. Paul Ryan that would, as The New York Times reports, reconfigure Medicare and “cut the top corporate and personal income tax rates while also” fundamentally altering Medicaid.

    Echoing language from President Obama’s recent budget talk, Rep. Chris Van Hollen slammed the Ryan budget for providing even more “tax breaks for millionaires while ending the Medicare guarantee for seniors and sticking seniors with the cost of rising health care.”

    During his speech at George Washington University, the president ripped into Ryan’s plan, saying, “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know.”

    In an article for Vanity Fair, Columbia University Business School Professor Joseph E. Stiglitz examined the lack of outrage over the growing gap between the wealthy and everyone else.

    Some people look at the income inequality and shrug their shoulders,” he wrote. “So what if this person gains and that person loses? What matters, they argue, is not how the pie is divided but the size of the pie. That argument is fundamentally wrong. An economy in which most citizens are doing worse year after year – an economy like America’s – is not likely to do well over the long haul.”

    The Agenda Project has distributed a letter signed by almost 100 millionaires who do urge the federal government to raise their taxes for “the fiscal health of our nation and the well-being of our fellow citizens…”

    Sen. Orrin Hatch ridiculed Obama’s call for the wealthy to carry a greater tax burden, saying that “rich Democrats” should “write a check to the IRS and make an extra payment on their tax returns to pay down the federal debt.”

  • April 13, 2011

    Many economists have long noted, with increasing urgency, the persistent and widening gap between the nation’s wealthiest and everyone else. In this recent piece, Columbia University Business School Professor Joseph E. Stiglitz noted that the “upper 1 percent of Americans are now taking in nearly a quarter of the nation’s income every year. In terms of wealth rather than income, the top 1 percent control 40 percent.”

    Wading into the budget battle in Washington, President Obama said today that tackling the budget deficit would require asking more from the nation’s wealthiest.

    “We cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society,” Obama said in reference to his predecessor’s hefty tax breaks for the nation’s wealthiest. “And I refuse to renew them again.”

    Taking on House Republicans’ budget plans, the president said, “There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know.”  

    Professor Stiglitz maintained in his article that the nation’s top 1 percent “may complain about the kind of government we have in America, but in truth they like it just fine: too gridlocked to re-distribute, to divided to do anything but lower taxes.”

    The president, in his speech at George Washington University, claimed that he believes the country’s most powerful do want to contribute to the betterment of society, saying, “I believe that most wealthy Americans would agree with me. They want to give back to the country’s that’s done so much for them. Washington just hasn’t asked them.”

    Meanwhile the Agenda Project is promoting a letter signed by nearly 100 millionaires asking Obama and congressional leaders to raise their taxes. “For the fiscal health of our nation and the well-being of our fellow citizens, we ask that you increase taxes on incomes over $1,000,000,” the letter states.

  • June 15, 2009
    Guest Post

    By Kamala Harris, San Francisco District Attorney

    States across our country are facing budget deficits. California is projected to begin next fiscal year with a deficit of nearly 25 billion dollars, equaling one fourth of the state's entire general fund. Over 10 billion of that general fund supports corrections and law enforcement. In this fiscal crisis, there is no denying the facts: tough budget times are here for public safety agencies. As the District Attorney for the City and County of San Francisco, I am personally familiar with the difficult circumstances we face. Without a significant shift in local and state practices, we can predict that shrinking law enforcement and corrections funding will result in higher crime rates, less support for victims, and fewer offenders being held accountable. If ever there was a time to think outside the box and break with the failed approaches of the past, the time is now. We need to do something different.

    In San Francisco, I have developed a smart on crime approach: we must be tough on serious and violent offenders while we get just as tough on the root causes of crime. In my office, we have raised felony conviction rates and sent more violent offenders to state prison, at the same time we have launched innovative, cost effective approaches to reduce recidivism, truancy, and childhood trauma. With a genuine investment in breaking cycles of crime, we can improve public safety at the same time that we save precious public resources.

    Reentry: Why it Matters to Law Enforcement

    Over the last thirty years, our prison population has soared. In 1980, California had a prison population of about 24,000 in a state of 24 million. Today we have an inmate population of 172,000 out of 36 million people. This means that since 1980, our population has grown by 50 % while our prison population has grown 617%.

    Today, the majority of those inmates are not first-time offenders. Each year, approximately 70 percent of those released from California prisons commit another offense, resulting in the highest recidivism rate in the nation. These repeat offenses are preventable crimes that claim more victims and harm communities' quality of life. It costs an estimated $10,000 to prosecute just one felony case, and about $47,000 per year to house just one inmate in prison. Every time an inmate is released and commits a new crime, local and state jurisdictions pay those costs over and over again. To keep our communities safe and use public money wisely, we must ensure that people coming out of the criminal justice system become productive citizens and stay out.