It’s called ‘starving the beast’: the theory that a constant, consistent reduction in taxes will result in smaller government. A government that has a reduced income stream will, out of necessity, reduce its expenditures and inevitably shrink in size.
The starving process can take many forms. Reduction in income tax rates, particularly at the higher income levels. A reduction in the number of income tax rates, i.e., eliminating the progressivity of the tax rates, thus reducing the volume of dollars coming into the government coffers. Tax caps on government, such as the recent 2% cap imposed on local governments in New York State. Creative tax breaks that favor certain segments of the economy, which has the two-fold impact of reducing tax revenues and reducing supposedly ‘onerous’ regulatory burdens on the market.
Each of these methods has been used in the past 30 years, the result of the ‘Reagan revolution’ of conservative government. We can all argue about whether it has really reduced the size of government; most of the numbers demonstrate that it has not, primarily because governments find creative ways around them.
Such tactics have had disastrous affects at the state and local government level, where government is obligated to balance its budget annually -- unlike the federal government, they can't print money. California's education system is frequently held up as an example: once the leader in the nation, that state's education system suffers from poor school performance and failing infrastructure, as the tax investment has dwindled due to 'proposition 2 1/2', which placed a limit on property taxes. Over the past 30 years, the State has not filled the gap.
A mandated squeeze on taxes forces governments at all levels to make choices, to prioritize where the revenues are spent. And the impact is not always pretty – because the decisions tend to favor those with money and power. Health care, education, food assistance, unemployment programs are targets for cuts, while tax abatement and business investment loan programs are funded.
Meanwhile, those at the top of the income pyramid get to keep an ever-increasing percentage of their money. Reagan and his disciples – the Grover Norquists of the world -- believe that such a system permits the dollars to ‘trickle down’ to those in lower income brackets, as those with money would invest in the market, expanding opportunities for all.
It hasn’t happened.
Tuesday, November 22, 2011
Sunday, November 06, 2011
Education Disparity
David Brooks weighed in on the income disparity issue on October 31. He did not deny the movement of wealth to a smaller percentage at the top; as with so many apologists, he downplayed the significance and magnitude. He also identified the other disparity, which he names the Red Inequility:
Then there is what you might call Red Inequality. This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else. In these places, the crucial inequality is not between the top 1 percent and the bottom 99 percent. It’s between those with a college degree and those without. Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 percent more than the average high school graduate, according to the Fed chairman, Ben Bernanke. Now the average college graduate makes more than 75 percent more.
He believes this Red Inequality is much more important, and has a longer-term negative impact on our country. He states that what we actually need is to close the opportunity gap by improving our capacity to get more people through higher levels of education.
He is right. But if we were to ask him whether we, as a society, should pony up more dollars to get more people through college, he would probably hesitate.
And there, he would be wrong. Because money – and the heavy financial burden necessary for students to complete college and beyond – is one of the greatest roadblocks to that educational opportunity he so eloquently defends.
A roadblock the 1% never has to worry about.
Then there is what you might call Red Inequality. This is the kind experienced in Scranton, Des Moines, Naperville, Macon, Fresno, and almost everywhere else. In these places, the crucial inequality is not between the top 1 percent and the bottom 99 percent. It’s between those with a college degree and those without. Over the past several decades, the economic benefits of education have steadily risen. In 1979, the average college graduate made 38 percent more than the average high school graduate, according to the Fed chairman, Ben Bernanke. Now the average college graduate makes more than 75 percent more.
He believes this Red Inequality is much more important, and has a longer-term negative impact on our country. He states that what we actually need is to close the opportunity gap by improving our capacity to get more people through higher levels of education.
He is right. But if we were to ask him whether we, as a society, should pony up more dollars to get more people through college, he would probably hesitate.
And there, he would be wrong. Because money – and the heavy financial burden necessary for students to complete college and beyond – is one of the greatest roadblocks to that educational opportunity he so eloquently defends.
A roadblock the 1% never has to worry about.
Sunday, October 30, 2011
Occupy Albany
Occupy Wall Street may not come up with solutions, but at least it is asking the right questions in a nonviolent setting. I don’t believe that love can be forced, but I believe it can be provoked. I don’t believe that generosity can be forced, but it can be provoked. Occupy Wall Street is provoking generosity.
Shane Claiborne, co-founder, Simple Way, in Christian Century, 10-20-2011
The Occupy Albany folks are camped out in the park outside my office window. I can’t actually see them thru the trees; the western part of the park, which I overlook, is the responsibility of the State, while the eastern section is managed by the City. The occupants choose to test the City’s resolve on the 11PM curfew, rather than the State.
The Occupy movement has taken lots of hits over its perceived lack of focus. The themes appear to be corporate greed, banks, and the financial structures of society. The rallying numbers are 1% and 99%, the former representing the percentage of the population that owns over 40% of the wealth in the country. The media also seems to pick up on a leadership issue: there is no one organization that commences, manages, and stimulates the urban-based occupations, and no specific individuals that make the speeches in front of the camera – the usual ‘official spokesman.’
In the end, that may be a positive paradigm. The ultimate democracy: the group is the power and the power is derived from collective decision-making. A romantic notion, certainly, but it gives the group the ability to fend off singular ad hominem attacks. Push on one part of the balloon, and another part expands.
The group’s argument is appropriate – wealth is distributed inequitably in this country, and major American corporations have been a primary driver. But the focus of the protest is misplaced.
In our system of capitalism, the purpose of a corporate entity is to earn profits for its shareholders – a system that applies to the small corner store owner as much as it does to a multi-national. Corporations are going to act in their best interests to maximize profits and reduce costs through every means available: closing plants and offices or cutting staff; seeking property tax cuts from local governments; lobbying for a lower capital gains tax; pitting one town against another and one state against another for gimmies like free ‘shovel-ready’ property, tax abatements, or interest-free grants; threatening to leave town unless taxes are reduced or waived; pushing for reduced regulations, higher tariffs on foreign goods, or tax advantages for foreign investment. Major companies have successfully argued for bailouts from the federal government to stave off failure – thus privatizing profits (it’s mine, I earned it, I’m not sharing) and socializing risk (durn, we failed, everybody must kick in to save us, the shareholders can’t do it alone).
Corporate America can’t be blamed for working that system – no matter how questionable or ethical the tactics.
We are to blame for letting it happen.
We have a structure in place for countering these activities. That’s what government is for. This is the role of government, the people we select to set policies in the form of law and regulation, and the agencies created to implement and enforce them.
That role has been distorted for the past 30 years, as we have tilted the balance of our assets, our income, and our wealth through regressive tax policies, poorly-conceived investments, and lax regulatory enforcement.
Somehow, government is now viewed as a bad thing. And we are worse for that image.
Shane Claiborne, co-founder, Simple Way, in Christian Century, 10-20-2011
The Occupy Albany folks are camped out in the park outside my office window. I can’t actually see them thru the trees; the western part of the park, which I overlook, is the responsibility of the State, while the eastern section is managed by the City. The occupants choose to test the City’s resolve on the 11PM curfew, rather than the State.
The Occupy movement has taken lots of hits over its perceived lack of focus. The themes appear to be corporate greed, banks, and the financial structures of society. The rallying numbers are 1% and 99%, the former representing the percentage of the population that owns over 40% of the wealth in the country. The media also seems to pick up on a leadership issue: there is no one organization that commences, manages, and stimulates the urban-based occupations, and no specific individuals that make the speeches in front of the camera – the usual ‘official spokesman.’
In the end, that may be a positive paradigm. The ultimate democracy: the group is the power and the power is derived from collective decision-making. A romantic notion, certainly, but it gives the group the ability to fend off singular ad hominem attacks. Push on one part of the balloon, and another part expands.
The group’s argument is appropriate – wealth is distributed inequitably in this country, and major American corporations have been a primary driver. But the focus of the protest is misplaced.
In our system of capitalism, the purpose of a corporate entity is to earn profits for its shareholders – a system that applies to the small corner store owner as much as it does to a multi-national. Corporations are going to act in their best interests to maximize profits and reduce costs through every means available: closing plants and offices or cutting staff; seeking property tax cuts from local governments; lobbying for a lower capital gains tax; pitting one town against another and one state against another for gimmies like free ‘shovel-ready’ property, tax abatements, or interest-free grants; threatening to leave town unless taxes are reduced or waived; pushing for reduced regulations, higher tariffs on foreign goods, or tax advantages for foreign investment. Major companies have successfully argued for bailouts from the federal government to stave off failure – thus privatizing profits (it’s mine, I earned it, I’m not sharing) and socializing risk (durn, we failed, everybody must kick in to save us, the shareholders can’t do it alone).
Corporate America can’t be blamed for working that system – no matter how questionable or ethical the tactics.
We are to blame for letting it happen.
We have a structure in place for countering these activities. That’s what government is for. This is the role of government, the people we select to set policies in the form of law and regulation, and the agencies created to implement and enforce them.
That role has been distorted for the past 30 years, as we have tilted the balance of our assets, our income, and our wealth through regressive tax policies, poorly-conceived investments, and lax regulatory enforcement.
Somehow, government is now viewed as a bad thing. And we are worse for that image.
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