Tag Archives: deficit spending

DEFICIT LIVES, By Louise Annarino, October 14, 2012

The effort to make Americans fear deficit-spending could be better used discussing what we should do to stop deficit-living. Core areas of our cities, small towns and rural areas are struggling to survive. Poverty has dug a hole, a social and personal deficit, in which large groups of our populace reside. The stimulus has stopped the slide into the hole for most, offered a hand up and out for many, but too many see no way out.

How did we get here, with holes so deeply torn in our social fabric that the middle class has fallen through those holes along with the impoverished? When we did we stop building and strengthening America so all of us could keep the American Dream alive? Instead we allowed charlatans in the think-tanks, lobbyist firms, and the media to paper over the holes, and keep us entertained so we would not notice that the pretty prints they used were mere paper. It started out slowly, but with fall after fall widening the holes entire sections of the fabric split wide open, until the entire fabric was in danger of slipping out of our hands. President Obama took a firm grip, and sewed stimulus patches made of strong material over the holes, all the while warning us that the cloth was worn and need to be replaced; that the holes had so weakened the fabric that major change was needed,and that the fabric could otherwise tear again. But those who met secretly during his inauguration to plot his own down-fall through those holes, pledged to keep them open.

Republicans blocked President Obama’s efforts to select and install a new fabric to support our lives. Many confuse this fabric with the ‘safety net’ strung below it; but, it is not just the safety net which is in danger from Republican policies and the Romney-Ryan Budget, it is the entire fabric strung above the net. Yes, the safety net is struggling; but, not because it was not well-designed, nor well-built, but because it is overloaded by those who fell through holes in our social fabric. It was never intended to hold so many of us. The one way we can relieve stress on our safety net is to replace the social fabric and pull as many Americans off the safety net and back up into the middle class as we possibly can. This is what President Obama intends to do, what he has been doing, and what he will continue to do if re-elected. We must cast our vote to re-elect him president, and cast our vote to elect Democrats to the U.S. House, U.S. Senate, and to state offices who support his vision and will work with him to get the job done. What we do not need are those who insist we cannot replace nor repair the whole cloth; but, must simply remove people from the safety net through privatization of medicare, social security etc.

The National Poverty Center reports that the poverty rate was  22.4 percent, or 39.5 individuals during the 1950’s. “These numbers declined steadily throughout the 1960s, reaching a low of 11.1 percent, or 22.9 million individuals, in 1973. Over the next decade, the poverty rate fluctuated between 11.1 and 12.6 percent, but it began to rise steadily again in 1980. By 1983, the number of poor individuals had risen to 35.3 million individuals, or 15.2 percent.” http://www.npc.umich.edu/poverty/.

I still recall the photos of starving children, eyes wide with uncertainty, on the porches of Appalachia and the Mississippi Delta which stirred President Lyndon Johnson to declare a War on Poverty in the 1960s, which led to the decline of poverty. President Ronald Reagan’s stance in the 1980’s was that we had lost the War on Poverty;and, that social safety net benefits did not justify its cost. We soon saw poverty levels increase.This Reaganomics view of poverty prevails today. But a new paper from Bruce D. Meyer and James X. Sullivan says it’s missing everything. “We may not have won the war on poverty, but we are certainly winning,” they write. When they looked at poorer families’ consumption rather than income, accounted for changes in the tax code that benefit the poor, and included “noncash benefits” such as food stamps and government-provided medical care, they found poverty fell 12.5 percentage points between 1972 and 2010.” In effect, they are explaining that the safety net does work.

The problem is NOT the safety net but growing income inequality in our social fabric. http://www.businessweek.com/articles/2012-09-12/record-u-dot-s-dot-poverty-rate-holds-as-inequality-grows During the last decade the highest quintile of earners saw their real income rise 1.6% and the top 5% saw their incomes rise 4.9%, while the middle class saw their incomes decline 1.9%. The very lowest incomes, those in the safety net, saw their incomes stay the same. None of this data means the income of those in the safety net is adequate. Nevertheless, the extremely poor (those with less than 1/2 of official poverty level earnings), remained at 6.6% of the population. The middle class has not fallen that low because President Obama’s policies stopped the fall. As more people returned to work in a steady rise over the past nearly 4 years, the fabric of America grows stronger as well.

More is yet to be done, as President Obama reminds us. We cannot reduce the deficit and continue Bush tax breaks for top earners. In fact we must increase their income tax rate,including an increase on capital gains. The estate tax must not be eliminated but increased for those at the highest earning bracket, who are the only persons currently required to pay estate tax, it having been eliminated for lower income earners decades ago. And we must end the round of ceaseless war which benefits military contractors, and corrupt government officials at home and abroad. President Obama, as Vice-President Biden affirmed in his recent debate with Congressman Paul Ryan insists that American troops will be out of Afghanistan in 2014. He suggests that we instead, rebuild America’s education and transportation systems, repair and further develop American infrastructure, invest in small business development and manufacturing, research and develop green and innovative technologies, reduce and redesign our military capabilities for more cost effective security at home and abroad.

We can do all this and reduce the economic deficit. But, we must also end our willingness to overlook poverty, especially for those most greatly affected by it, our women and children.We cannot grow our economy when our children are not given the tools they need to compete and succeed. The National Poverty Center reports: “The poverty rate for all persons masks considerable variation between racial/ethnic subgroups. Poverty rates for blacks and Hispanics greatly exceed the national average. In 2010, 27.4 percent of blacks and 26.6 percent of Hispanics were poor, compared to 9.9 percent of non-Hispanic whites and 12.1 percent of Asians.

Poverty rates are highest for families headed by single women, particularly if they are black or Hispanic. In 2010, 31.6 percent of households headed by single women were poor, while 15.8 percent of households headed by single men and 6.2 percent of married-couple households lived in poverty. (See the U.S. census chart below)

“There are also differences between native-born and foreign-born residents. In 2010, 19.9 percent of foreign-born residents lived in poverty, compared to 14.4 percent of residents born in the United States. Foreign-born, non-citizens had an even higher incidence of poverty, at a rate of 26.7 percent.” http://www.npc.umich.edu/poverty/.

SOURCE: U.S. Bureau of the Census, Income, Poverty, and Health Insurance Coverage in the United States: 2010, Report P60, n. 238, Table B-2, pp. 68-73.

Those like Paul Ryan who argue we must reduce the deficit by reducing the safety net, decreasing income and benefits, weaken labor unions, reduce the size of government and lay-off government workers, privatizing government responsibilities as means to reduce government costs are “whistling Dixie” in more ways than one. Paul Ryan voted for unfunded Medicare Part D, which President Obama, unlike President Bush, has now included in his budget and improved through Obamacare by closing the donut hole. Including this expense within the Obama budget is really a disclosure of previously hidden Bush budget expenses. This is also true for the costs of the Iraq and Afghanistan wars which were passed as emergency measures, not budget items; included by President Obama in his budget and added to official budget deficit figures, but not done so by President Bush.

One must also note that Bush war-funding was historically unprecedented. To pay for World War II, Americans bought savings bonds and put extra notches in their belts. President Harry Truman raised taxes and cut nonmilitary spending to pay for the Korean conflict. During Vietnam, the US raised taxes but still watched deficits soar. President Bush did nothing to control the burgeoning deficits of war. Republicans and Democrats, unwilling to leave troops in the field without funding, settled with uncompromising Republican leadership and allowed this strategic undercounting of the deficit to go unabated and continued to vote for emergency war-funding, outside the regular budget bills. The willingness to kick the can down the road has become a hallmark of Republicans as they block every Democratic bill to increase jobs, reduce deficit, and stimulate the economy during the Obama administration. They are not ashamed , but proud of this tactic in their strategy to make  President Obama a one-term president. In the recently released video of Mitt Romney talking with his well-heeled donors in May he takes this tactic a step further,when he said the Palestinians were not interested in peace, the chances of a peace agreement was remote and the whole issue should be kicked down the field. Kicking problems down the field seems to have become an accepted Republican strategy. The Bush tax cuts added some $2.8 trillion to the national debt, according to the Congressional Budget Office. Congressman Paul Ryan voted for those cuts. To his credit, Ryan also backed the Troubled Asset Relief Program bailout, most of which has been paid back, and the auto bailout.http://www.theatlantic.com/politics/archive/2012/08/is-paul-ryan-really-a-fiscal-hawk/261170/. I mention this because it is disingenuous and hypocritical to blame the deficit on President Obama and democrats in Congress.

I first noticed this Republican disregard for current reality and for balanced budgets during 6 months of debate over Medicare reform in early 2003. I had falsely believed that Republicans were fiscally more conservative than Democrats. Clearly,I was wrong. Reagan, I was aware, had little to no regard for fiscal responsibility, but he had once been a Democrat after all !

Like many others, I saw the need for prescription coverage for seniors and hoped new legislation would allow the government to negotiate for lower costs and formulary control similar to V.A. cost-control efforts. Big Pharma lobbyists blocked, and continue to block such an effort. The bill came to a vote at 3 a.m., just minutes before it was scheduled to close, the clock was stopped for 3 hours with the bill losing, 219-215 while Republicans on the floor, and including President Bush by phone, strong-armed congressman to change their vote. “Then-Representative Nick Smith (R-MI) claimed he was offered campaign funds for his son, who was running to replace him, in return for a change in his vote from ‘nay’ to ‘yea.’ After controversy ensued, Smith clarified no explicit offer of campaign funds was made, but that he was offered ‘substantial and aggressive campaign support’ which he had assumed included financial support.” http://www.theatlantic.com/politics/archive/2012/08/is-paul-ryan-really-a-fiscal-hawk/261170/.

At about 5:50 a.m. the bill passed the House 220-215. The bill itself was finally passed in the Senate 54-44 on November 25, 2003, and was signed into law by President George W. Bush on December 8. Now, Romney and Ryan threaten to eliminate Obamacare and its improvements of medicare, including Part D; plan to privatize medicare and social security. If these programs are more costly than they need be it is because of Republican refusal to rein in excess costs businesses extract from the program.

Medicare Part D did provide prescription coverage but did not reduce costs as much as it could have because of what it failed to include: it prohibits the Federal government from negotiating discounts with drug companies, and it prevents the government from establishing a formulary. It did, however, provide a subsidy for large employers to discourage them from eliminating private prescription coverage to retired workers (a key AARP goal). Obamacare now provides subsidies to small businesses which makes their overall provision of health care insurance affordable. Efforts to include negotiating costs for drugs under Obamacare was blocked by Republicans.

Clearly, it is not Obama’s efforts to reduce medical and insurance costs which makes these medial social fabric programs a drain on government coffers, but the effort of Republicans to protect and expand financial gain of private service providers. President Obama and Congressional Democrats do not seek unfair advantage over private providers; but seek to stop unfair advantage, fraud and abuse by such providers. Obamacare is already predicted to save medicare $716 billion in such provider and insurance company abuses. That money is being channeled to provide more preventive, cost-free health care services for medicare users. This is how we create a stronger social fabric for the middle class. Improving and increasing medicaid coverage is another part of strengthening American fabric.

During an economic downturn, individuals lose jobs, incomes drop, state revenues decline, and more individuals qualify and enroll in Medicaid which increases program spending. However,data indicate that declines in state revenues were a much more significant factor for state budget gaps than increases in Medicaid spending. “Total state revenues dropped by 30% in FY 2009 compared to total Medicaid spending increases of about 7.6% in that year,” http://www.kff.org/medicaid/upload/7580-08.pdf.

Today, 50 states plan or are implementing a new policy to control medicaid costs in multiple areas. State revenues have shown positive growth fro the last 7 quarters, as the unemployment rate continues to drop (now 7.8%) and the GNP continues to improve. States must continue to make delivery of service changes designed to improve care and control costs, thanks to Obamacare. Its “maintenance of eligibility” requirements generally prohibit states from restricting Medicaid eligibility or tightening enrollment procedures. Obama’s focus on wise and educated restructuring of programs for maximum efficiency and best practices in care delivery are another part of strengthening the American fabric.

But, and this is important, these improvements take time. They must however occur if the American Dream is to survive. While government works to  balance budgets, streamline and improve services, reduces fraud and waste it must never forget the impact of income inequality on those African-American, Latino and immigrant single-mothers. we must help them raise their children out of the safety net and up onto the social fabric of the middle-class. We must provide preventive health care, women’s reproductive health care, and children’s health care to everyone in America. We must be certain every child is well-fed, provided with stimulating day-care and pre-schools to ready them for a top-notch education. They need warm clothes for winter, safe after school and summer programs, neighborhoods free of crime and violence. We must not only show them a way out of poverty, but strengthen and empower them to follow the path. I am reminded of the United Negro College Fund motto “ A Mind Is a Terrible Thing  to Waste.” Our American middle-class motto must be “ A Child is a Terrible Thing to Waste.”  President Barack Obama and Vice-President Joe Biden would weave this motto into the fabric of America. They will not kick American children down the road, until the deficit is paid off. They will not continue and increase income inequality with tax relief to those who don’t need it. They will reduce the economic deficit AND the human deficit, by reducing income inequality.  That is how we strengthen the American fabric for all of us.