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Tax Hikes, State Deficit Nightmares

Illinois hikes its income taxes 67 percent to help close its budget deficit. We look at states swimming in red ink, and the way out.

Illinois House Speaker Michael Madigan, D-Chicago, left, and Rep. Jack D. Franks, D-Woodstock, right, at the State Capitol in Springfield, Ill., Jan. 13, 2011. (AP)

American states – state governments – are in trouble. They are facing deficits and budget gaps like never before — huge, wide gaps that the federal government won’t cover.  The gaps are so big they swallow up cutbacks faster than many statehouses can cut.

Now one of the most hard-pressed states, Illinois, has pulled the emergency cord – raising state income taxes overnight, in a desperate, midnight move, by 67 percent in one go.

Illinois’ “fiscal house,” said the governor, “was burning.”

We look at state budgets in turmoil, and extreme measures on the way.

-Tom Ashbrook

Guests:

Ray Long, statehouse reporter for the Chicago Tribune.

J. Fred Giertz, professor of economics and faculty member of the Institute for Government and Public Affairs at the University of Illinois. He’s executive director of the National Tax Association.

Susan K. Urahn, managing director of the Pew Center on the States, a division of the Pew Charitable Trusts that identifies and advances effective solutions to critical issues facing states.

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  • Flowen

    Tom

    Please ask your guests about the practicality of State-owned Public Banks.

    The State owned Bank of North Dakota is credited in allowing North Dakota to achieve the healthiest state finances in the country, by avoiding dependence on corporate banking, and may be a model for other states:
    http://publicbankinginstitute.org/home.htm

    “Only one state, North Dakota, has not reported budget shortfalls in any of these years [2007-2012]“…ref: Center on Budget and Policy Priorities:
    http://www.cbpp.org/cms/?fa=view&id=711

    Bank of Dakota website:
    http://www.banknd.nd.gov/about_BND/index.html

  • john in danvers

    Isn’t the basic problem that we no longer tax the people who have the money, the top 10%? and the bottom 90% have lost their ability to pay taxes? both federal and state?

    And federalism is like a codified institutional struggle isn’t it? Kind of like a low level war between the states and the feds? If the feds will not act to protect the states (bailout), and they won’t act to protect the states’ residents’ wages (tariffing the low wage content of imports–Michael Lind’s “social tariff”), doesn’t this fed behavior constitute an institutional attack on the states?

    Enquiring minds want to know!

  • Yar From Somerset, KY

    The sick elephant in the room is the Uniquely American Health Care System. It is so difficult to get good numbers on who is paying the bill for nearly 20 percent of our GDP.
    Business owners rail at the extravagant health plans offered to state workers. What is lost in the argument is that those state plans are subsidizing under payments for Medicaid.
    The health insurance balloon is squeeze on many different parts with little understanding how it sabotages our economic system.
    We must make the choice if we are to remain a civil society or become a nation of day laborers.
    The tension is real and the results are not clear, 1/2 of the US population have conditions that make private health insurance unfordable.
    This results in cost shifting to the taxpayer.
    We have universal health coverage in that any person can walk into the ER of a hospital and receive assessment and probably some treatment.
    Over the past decade, as more people lose jobs with health benefits and the health burden is shared by fewer people, state budgets for healthcare have exploded.
    The state budget crisis is all about our broken health delivery and insurance system.

    Please draw a picture of this elephant so listeners can see how our regressive health taxes are crippling our country. Every dollar paid for healthcare is a redistribution (TAX) of wealth.

  • Terry, Watertown, MA

    There is NO way states can make up their deficits. State employees rightly earned their pensions, in exchange for lower wages than wages for similar jobs in the private sector over the past decades. Now state leglislatures want to wrest those health and pension benefits away to make up for past mismanagement (Mitt Romney’s blind eye to shoddy work and millions in cost overruns for Boston’s Big Dig tunnel projects come to mind) and current economic forces beyond any one state’s power to control. This is patently unjust to hard-working state and local employees (teachers, security officers, fire fighters, troopers, etc.). And to our kids, whose education is being short-changed, our hospitals, our roads and bridges, etc. (I am not and have never been a public employee.)

    Without ending our wars, we cannot afford the society to which we have been accustomed to live in. The federal government MUST drastically cut the military budget, end the wars, and raise taxes the most wealthy–certainly on million- and billionaires–so that the rest of us have enough after taxes to simply live on and so that states will get the assistance they need. We also need the new Health Care Proection (health security) law to help us get to a saner way of life. Without this basic safeguard (health), which the Constitution mandates (Congress to provide through taxation for the general welfare of the people), we are fast-approaching the level of 3rd-world countries, where corruption and bribery, instead of justice under the laws, rules.

  • BHA – Vermont

    “any person can walk into the ER of a hospital and receive assessment and probably some treatment.”

    Make that “AND treatment”. They MAY NOT turn ANYONE down.

    The ER is the MOST expensive place to get medical care for non emergency situations. Two stitches in the chin – $1,200.

    The “Revoke the job killing health care reform bill” should be renamed to the “Make sure health care is unaffordable, bankrupts people and gives LOTS of money to the insurance companies who fund my reelection bill”.

  • William Powe

    America is in decline and may never be the same again, it now appears obvious that we are headed into
    another depression. Gold is at all time highs, the Fed
    prints money while the economy still barely sputters. I think public employees will be cut back
    in benefits and salaries, the last good jobs are now with the Gov’t in police, fire etc. This last bastion of the middle class will be offered up to the wall street gods and even that will not be enough. I think America is headed for second world status in another 10 years or sooner. Had we had decent honest leadership or had a functioning democracy this would not have happened.
    The supreme court by allowing corporate donations to political campaigns struck the final blow to any real hope of political change. The top 1% control the media
    and other levers of power like the banks, congress etc
    and they have well over 20% of the wealth, the bottom
    40% splits something like 5% of the wealth. You don’t have to be a Marxist to see the writing on the wall.
    If you are young make plans to get out Europe at least
    has a functioning democracy and a safety net, they care enough to demonstrate against the money gods, here the cynicism is so thick it freezes any sense of outrage.
    have a nice day

  • WINSTON SMITH

    Much has been written lately (the Economist, 60 Minutes, etc.) on the rediculously generous pay and retirement packages for government workers at all levels. But of course, given the strong unions, reducing cost and enhancing productivity at the government level is off of the table. (it’s funny how the only place where unionization is increasing is in goverment, where competition is not in the vocabulary…if we are short of money, we just have to raise taxes…the public be damned!) So the straw man will be that we have to cut back on other services, social security, etc. which isn’t the real problem. I find it interesting that whether you are talking about the federal government, virutally all state governments, and many local governments, the problem is the same. What the Republicans should do is refuse to raise the debt ceiling until all of the stinking federal unions ante up a big pay cut and a raise in the retirement age until 66, like the rest of us. What other enterprise other than a government entity could continue to lose $8 BILLION A YEAR

  • WINSTON SMITH

    Finishing my last comment, What other enterprise than a government entity like the postal system could continue to lose $8 BILLION A YEAR without having to reduce costs to return at least to break even? these stinking unions are and will be the ruin of our country.

  • Brandstad

    The US used to have a strong proud middle class. I propose the weakening on the middle class has come about from Progressive policies, like expansion of welfare, unemployment, tax credits for the poor, re-distributive subsidies, and promotion of broken families.

    In the booming 50′s anyone taking public assistance was ashamed of the fact they couldn’t support themselves and their family, while today people are almost proud of the money they can draw from the government and even more detrimental to society is the fact that they think society owes the money to them. As long as this continues society will continue to be dragged down by the poor and the poor will neither be motivated by shame or necessity to pull themselves up from the bottom.

  • Yar From Somerset, KY

    @BHA
    “The ER is the MOST expensive place to get medical care for non emergency situations. Two stitches in the chin – $1,200.”
    This is part of the delusion of cost of service. I am not sure it actually costs the hospital so much more to provide care. They are cost shifting as well, if only one in ten patients pay for those stitches, then your 1,200 is only 120 for you and 120 for each of the other nine.
    See the problem? We don’t have clear comparisons to compare across health systems.

    This is part of our health system’s design, nobody can tell what the cost or benefit of any decision.

  • WINSTON SMITH

    The teachers’ unions are a big part of the problem as well. They are paid a rediculous wage for 9 months work, get a rediculous number of sick days per year which many of them use whether they are sick or not, the union protects incompetent teachers. They never experience a pay decrease, unlike those in the private sector. And in states where enrollment is decreasing, they fight staff reductions. Even though we spend tons and tons of money on public education, certainly multiple times what private Christians schools spend per student with much better academic results, they are always complaining that education will suffer. It is because of the liberal agenda of the NEA, etc. that has brought about the moral decline of our country and dumbed down the student population.

  • Marc

    I agree with many of the comments so far. A few anecdotes and some data.

    Cousin who’s a community college teacher. Puts in two or three hours per day. Long summer vacations, makes twice the national average plus great benefits. Has a bachelors degree but knew the right people.
    Friend’s husband is a cop on very generous disability for the last 5 years. Has a back problem. Ski’s a lot out west – plays good basketball too.
    Another relative retired at about 50. Tells me he gets 80% of his salary plus great health care. Now works for the state as a contractor doing pretty much the same thing.
    I know the local public school principal. Asked her about a teacher that everyone avoided because she had essentially checked out. Principal said she has no power to move her out of the spot.
    Firefighters banking sick days while taking weeks off per year. Postal workers finding places to take naps because their routes are designed for someone going turtle speed (a friend was a temp letter carrier and couldn’t figure out what to do with all his extra time). And of course, in Massachusetts, there are cops guarding holes in roads behind barricades.

    Then of course, there’s all the hard data about how total compensation for public sector workers is much greater than those in the private. US bureau of labor for 2009 put wages and benefits combined at 44% higher for public sector employees.

    I don’t resent people exploiting the system – I resent having to work long hours so some layabout (what a great word) protected by a union gets all his expenses taken care of.

    There’s a saying that goes democracy only works until people figure out they can vote themselves the money. Greece discovered this, Spain is discovering it, I suspect we’re next.

    And by the way, I agree with all the suggestions of cutting the military, single payer health care, taxing the super wealthy, etc.

  • Brandstad

    Cost shifting is a huge problem, since the federal government has been a major payer through Medicare and Medicaid they have set the price of many services. Most of those services the government underpays the providers so the cost burden gets shifted to a part of the hospital that doesn’t have government regulation.

    Some people think this is good and the government should regulate all service costs, but these people are vary ignorant of the fact that if the government sets the prices too low, the providers will either be forced to give a deficient service compared to what they could do or not offer that service at all. If the government sets the price too high, the hospitals will make money at that task and try to do more of them then needed. The only way to truly set optimal prices (the lowest) is the FREE MARKET!

    We haven’t had a Free Market in the healthcare field for decades!

  • Isaac Bresnick

    Writing from Groton, CT:

    The People are their own worst enemy. We want lots and lots of programs and good service from our government (which probably requires well-compensated government employees), but none of us want to pay for it, and California is the prime example.

    I love the services my State and Federal Governments provide for me and my neighbors, and I’m happy to have them. Raise my taxes, please, for to paraphrase Justice Holmes: I enjoy paying taxes; they are the price I pay for civilization. We’ve got a lot of civilization, and it needs to be paid for.

  • Brett

    I somehow knew that the resident neo-cons would be chiming in early with lots of phrases like “liberal agenda,” “Progressive policies,” “brought about the moral decline of our country,” “expansion of welfare,” “tax credits for the poor,” “re-distributive subsidies,” “promotion of broken families,” and the like…relying on talking points seems to be a neo-con’s stock and trade. Interestingly, the true conservatives (Rob from NY comes to mind) seem more invested in a conversation, a dialogue.

  • Brandstad

    Isaac Bresnick,

    I live in Iowa and our society is primarily made up of individuals and businesses. We like the fact that oour state government rarely touches us in our day to day life and when it does it goes unnoticed because it is small and non invasive. Because of this we will never have the “society” that California offers, but we will be able to sustain ourselves in a much more civilized and safe environment.

    A great example of California’s “Great” government run society. My uncle remodeled his kitchen in San Diego and he was surprise to find out that by law he had to install under cabinet lighting in the kitchen! What gives the government the right to require under cabinet lighting in peoples personal houses? How much does this law cost California? How many other stupid laws like this are there in California?

  • Yar From Somerset, KY

    @WINSTON SMITH
    Do you equally hate the Chamber of Commerce as you do employee unions? They are a union of business interests.

    Blame games don’t get our nation to where we need to be.
    Look at who pays what. Don’t pick select taxes, look at the system overall. I focus on healthcare as an example a regressive funding model.
    I sure there are examples of employees gaming the system, but the gaming that occurs on the top tier of our economic structure is where we are really going off the rails from a civil society.
    It is in the interest of all to make our structure work.
    Anger at one group or the other only polarizes the debate, and doesn’t find solutions.
    Most government employees actually care about doing a good job. They don’t deserve the taxpayer hate.

  • WINSTON SMITH

    I somehow knew that the resident neo-cons would be chiming in early with lots of phrases like “liberal agenda,” “Progressive policies,” “brought about the moral decline of our country,” “expansion of welfare,” “tax credits for the poor,” “re-distributive subsidies,” “promotion of broken families,” and the like…relying on talking points seems to be a neo-con’s stock and trade. Interestingly, the true conservatives (Rob from NY comes to mind) seem more invested in a conversation, a dialogue.

    Posted by Brett, on January 18th, 2011 at 9:16 AM

    Brett, you can sink to name calling etc if that makes you happy and feel good. The fact of the matter is that public pay and benefits is out of touch with the economic reality of the private sector middle class which is made to pay for all of this. You are entitled to your own opinion, but not your own set of facts. The unions in Greece and France are kicking and screaming all of the way to some semblance of fiscal normalcy. Our public sector unions are very adept of screaming and scare mongering in order to protect their featherbedding lifestyle.

  • Brandstad

    Why don’t public workers take a pay cuts anytime their department is loosing money?

    No one would run a company that lost money every year and continue to give pay & benefit increases every year while continuing to hire more employees.

    Many states are effectively bankrupt and more spending is never the answer to bankruptcy.

  • Brandstad

    Bloomberg.com: “U.S. banks are buying Treasuries at the fastest pace since just after the last recession, helping shore up demand now that the Federal Reserve has finished purchasing $300 billion worth to hold down borrowing costs.

    Even after banks including Bank of America (NYSE: BAC) and Capital One Financial Corp. increased such investments 26 percent to $125 billion in the 12 months through June, they have only about 1 percent of their assets in Treasuries, Fed data show. That’s down from the 8.5 percent average for the year after the past five recessions. Banks would have to buy $1 trillion more to reach past levels, so demand “could remain quite high for some time,” Barclays Plc said.

    Banks including JPMorgan Chase (NYSE: JPM), Citigroup (NYSE: C) and Wells Fargo (NYSE: WFC) are recapitalizing an industry that remains hesitant to take risks as joblessness approaches 10 percent. They’re profiting from a steepening yield curve, buying longer- term Treasuries with money acquired at short-term rates kept low by the Fed’s near-zero benchmark.

    That may temper yield increases amid record sums of new U.S. debt, keeping borrowing costs down even as banks lend out the smallest portion of their deposits in 15 years.

    “Banks will continue to purchase Treasuries for the next several quarters, at least until the end of 2010, as they continue to be reasonably risk averse,” said Ira Jersey, an interest-rate strategist in New York at RBC Capital Markets, which trades with the Fed as a primary government-debt dealer”.

    My comment: This is just a stealth monetization that temporarily benefits both the banks and the Treasury. The banks can go to the Federal Reserve and get money for a zero interest rate and then buy Treasury securities at 3%, lever up five to six times and get a risk free 15-20% return. The Treasury likes this because it helps to get rid of the mountain of debt they have to sell. The banks like it because they make free profits and they also reliquify their crummy balance sheets. This game can go on as long as interest rates do not go up. At some point inflation will take hold or the dollar will accelerate its decline and interest rates will have to be raised. Then the whole thing comes unwound as the banks are not going to hold US Treasury bonds if rates are going up as the value of the bonds will decrease. This is the race that is on, can the banks get well off this free carry trade before the FED is forced to raise rates? This whole scheme has disaster written all over it as bubbles are forming again in commodities and emerging markets. As usual it is all about timing.

    John Polomny

  • Brett

    Winston Smith:

    You dislike the “neo-con” term? I should think you’d be proud to be called such?!? You’ve stated characterizations, mostly (the phrases I quoted from yours’ and Brandstad’s comments would need substantiating otherwise, which you’ve not supplied). Saying a liberal agenda of any kind has brought about the moral decline of our country seems more in the realm of name calling than being called a neo-con, which you are, which Brandstad is…What would you call yourself, ideologically speaking. I’m happy to call you something else!

  • Yar From Somerset, KY

    Our public sector unions are very adept of screaming and scare mongering in order to protect their featherbedding lifestyle.
    And so is the Chamber of Commerce.

    So, what is the solution?

    Allow the public sector to collapse, send your kids to private schools, while the average worker can’t afford healthcare or education for their children?

    Do you have any idea what will happen if we don’t move toward a more sustainable lifestyle? We must use less energy or find a new energy source. We must care for the elderly and infirmed or risk civil unrest.

    The class war today is also an age war, “boomers” desire a retirement similar to the “great generation”, and the resources just are not there.
    Anger is not finding solutions.
    We are a country built on hope and hope is running short in today’s economy.

  • http://suburbanNortheast ThresherK

    A lot of folks who sat idly by while we gave the rich the keys to the treasury (and dump trucks to haul the loot off in) are whining about how we can’t afford to pay people what their contracts say.

    How can I convert my debts and mortgage into public sector union pensions? I want some of that sweet, sweet intellectual cover to renege on a promise I made to pay someone money.

  • Alex

    “No one would run a company that lost money every year and continue to give pay & benefit increases every year while continuing to hire more employees.”

    Except for the upper management. They usually make out quite nicely when the company goes bankrupt. Take most any chapter 11 case and you will see that the same management that puts the company into bankruptcy stays on and keeps getting all their pay and benefits.

  • WINSTON SMITH

    Winston Smith:

    You dislike the “neo-con” term?
    Posted by Brett, on January 18th, 2011 at 9:41 AM

    Brett,

    I guess the best term is a silent majority pessimist. I pay my taxes, I come to work every day. I work hard and don’t take advantage of the system. I don’t use sick days unless I am really sick. I pay my bills and avoid debt. I am not a lobbyist who has just moved from congress and is taking advantage of my congressional contacts. I am not a greedly, short sighted investment banker that is foisting a Ponzi scheme on the public. I don’t like Sarah Palin. And I don’t see either political party willing to stick their neck out and do what is best for the country rather than themselves. It is very frustrating to see our slow but steady descent down the tubes!

  • Brandstad

    The president is promising to reduce red tape and regulations after passing a 3K page healthcare bill that Obama is currently having 100 pages of regulations written for every page of legislation (on average).

    What a Joke! I suppose he thinks that more people will hear the news of his business friendly thoughts than will realize he is doing the opposite.

  • Charles A. Bowsher

    Tom, oh my gosh! 67%! Are you kidding me?

    Let’s look at the real numbers instead of the hyped numbers, shall we? Illinois is raising income tax from 3% to 5%. Which is an increase of 2% of wages. Two percent, now where have I heard that number recently? Oh yeah, that’s exactly how much the payroll tax was lowered in the recent sellout to the wealthy during the great “Tax Compromise” of 2010 brought about by the Republican kidnapper/extortionists.

    Sounds income neutral to me.

  • Dan

    Taxes need to be raised across the board. Just sayin’.

    -dan
    Boston, MA

  • http://z15.invisionfree.com/Augusta_Alternative/index.php?act=idx John Randolph Hardison Cain

    A decade of war has hollowed out the American economy. United States cannot move forward in an unimpeded way until we end these wars of choice, slash the Pentagon’s bloated budget by at least 50%, and invest in education and sustainable technologies that create green jobs that pay a living wage.

  • Brandstad

    Iowa is reducing our State deficit by 50% this year without raising taxes. We are balancing the books by reducing government services. Many of the cut programs were added or increased in the last 4 years, so it makes sense to roll them back.

  • Brandstad

    John Randolph Hardison Cain,

    Do your research. Spain was huge in Green Jobs and they found after years of investment that for every green job created 2.5 jobs were lost and the cost of the green job that was created was high on top. Be careful what you wish for.

  • ThresherK

    How about an hour-long show on Texas’ budget disaster? I’d love to have some experts delve into how a low-cost, low-benefit, “right to work” state where Governor Goodhair and Shrub have been running things for a decade and a half has come through the recession with flying colors.

    And I second Charles Bowsher: Our host really slips into right-wing scare language far too easily. After not hesitating to use 1 Trillion!!11!ONE! during the stimulus or the Affordable Care Act, now the percentage sounds like a lot, so it’s used.

  • Gullible non-Iowan

    “Many of Iowa’s services were added or created in the last four years”

    Can I buy a bridge from you?

  • Brandstad

    John Deere, Say good bye Moline Illinois, and say Hello Ankeny Iowa!

  • Lisa Peloquin

    From Cedar Rapids, Iowa

    With Gov. Pat Quinn’s history of reforming government, I can’t think of a better person to head up the efforts to straighten out the fiscal mess in Illinois. It took great courage for him to openly state the need to raise taxes to begin to deal with this situation.

  • Brandstad

    Gullible,

    No you can’t.

    We did very little infrastructure investments in the last four years and provided greatly increased services like state funded preschool. Public transportation to locations that don’t draw riders…

  • Bill Meyers ( Champlain, Ill.)

    The liberal spending and liberal government policies of states like Illinois have bankrupted the states, towns, counties, cities, and villages. Such spending has destroyed the tax base of these communities. Liberalism does not work. The liberals only believe in more spending. If liberalism worked, then such liberal states should be prospering. But they are not. They are all spending more than they take in. They have made promises that are unaffordable and not sustainable. The private sector did away with defined benefit pension plans years ago, yet the states continue to support these plans. Spending must be tempered and limited by results, need, and affordability. You cannot spend your way out of debt.

    Where are ordinary people supposed to get the money to pay these taxes?

  • Gullible non-Iowan

    I understand we have other Iowans here today. Can someone confirm Brandstad’s assertions independently?

  • BHA – Vermont

    OK, we all hate tax hikes, but 3% to 5%? What other taxes does Illinois have? 5% is NOTHING!

    People making up to $34,000 in Vermont pay 3.55%, between $34,000 and $82,400 it is 7%, between $82,400 to $171,850 it is 8.25% and there are 2 more brackets above that. There are deductions, and a plan this year to potentially reduce the deductions and the rates.

    And that doesn’t include property taxes.

    And a FLAT tax? Let the rich buy another luxury car and screw the poor who are trying to figure out if they buy food or medicine (or neither). Graduated taxes are the only fair method. A person trying to live on $25K a year should NOT be paying the same rate as someone making 2X, 5X, 10X, 50X.

  • Charles A. Bowsher

    Bush, Bush, Bush,
    Tax cuts to his wealthy friends = $Trillions
    Wars in Iraq and Afghanistan = $Trillion
    Unpaid for Medicare Drug Benefit = $Trillion
    Running our economy into the ditch =$Trillions and Trillions and Trillions (apologies to Carl Sagan)

    Charles in KY

  • Rob (in NY)

    This should be an interesting show and I hope to listen to the the tape later today. Tom, I would ask your quests to discuss top 5 or top 10 states with the largest budget gaps. It will no doubt that this list will be overly represented by states where tax rates are already very high and where public employees have the most influence (e.g. NY, NJ CA, Illinois), but I also believe states without a state income tax (or very low rates), such as Texas and Florida also have large budget holes.

    Regarding state and local pension reforms, here are a couple for discussion. A good place to start could be by going after some of the more abusive practices, such as “padding” of overtime in the last three years that seems to becoming increasingly common. This is where employees (particularly common in the NYPD) work 25% to 30% overtime in their last three years to increase the pension income. A better system would base the pension off the last 5 years and include only the person’s base salary or the average overtime the person worked over his or her entire career.

    States also can not afford to pay pensions after only 20 or 25 years of service (e.g. again, this is very common here in NY). Given that employees change jobs more often, I also think it makes sense to transition younger employees towards a fully funded defined contribution system, where the employers are forced to fund the employee’s retirement account annually, rather than making empty unfunded promises that ultimately pits the state employees (e.g. who rely on an unfunded pension) against future taxpayers (e.g. who get stuck with the bill)and the the only winners are the politicians who buy votes by promising benefits to state workers that the state can not afford to pay. More later.

  • ThresherK

    “Can state budget woes torpedo the recovery?” our host asks.

    Actually the states’ austerity pretty much has offset the spending part of the stimulus. All the jobs created by the stimulus aren’t the “extra” spending the press is insisting it is. It’s certainly not the OMG!!! scare language headlines, and when we’ve been coming out of a recession like this, pitiful.

    Why is On Point obsessing about the deficit when unemployment is 9-ish%? Corporate profits are through the roof; the stock market is doing well. How many millions of Americans will be thrown overboard so “the economy” on average keeps doing this?

  • Central Iowan

    Instead of using per cent, please share Illinois’s actual rates.

    Going from 3-5% is not huge nor a large financial burden. Additionally the law was quite creative with an automatic setback to 3.25. And 5% is still 2nd lowet among neighboring states.

    Iowa, with its surplus, plans on not using it for on-time captial expenses (buildings and bridges and roads and park improvements and land acquisition and flood mitigation). Rather the new old governor wants to treat businesses to a tax party on the backs of income tax of the people. I’ll take Illinois’s creativity over Iowa’s stupidity.

  • Larry

    Ever go to Europe?

    Ever go to Japan?

    Know any people over there?

    Ever wonder why people with similar jobs to yours have such a higher standard of living?

    It’s called “the military spending in America is making you poor”.

  • Charles A. Bowsher

    BHA in Vermont @ 10:20
    Here in KY we essentially have a 6% income tax and a 6% sales tax and every year we have to do a special reconciliation of our Fed tax return numbers on the state form because we haven’t aligned our tax form to the Fed’s. Some special interest has control of a miniscule part of the Revenue cabinet apparently.

    Central Iowan@10:27- Thanks for the real story on Iowa

  • Larry

    How about an hour-long show on Texas’ budget disaster? I’d love to have some experts delve into how a low-cost, low-benefit, “right to work” state where Governor Goodhair and Shrub have been running things for a decade and a half has come through the recession with flying colors.

    Posted by ThresherK

    A budget shortfall as high as $25 billion is projected as lawmakers head into the 2011 legislative session.
    http://www.texastribune.org/texas-taxes/2011-budget-shortfall/

  • ThresherK

    Charles Bowsher: I forget, is it Kentucky which taxes food, or is it Tennessee?

    (And is it the source of smack talk that I think it deserves to be? Taxing FOOD? Not prepared meals, alcohol, soda, but…canned beans, potatos, chicken parts?)

  • Seth Gillim

    What are the four states that aren’t seeing huge deficits and what have they been doing right? Can we learn from these states, or have they already had austerity in place while the rest of the country has been in denial?

  • BHA – Vermont

    Yar: “They are cost shifting as well”

    That was my point, sorry it wasn’t clear. The cost of ANY service in the ER pays for them to have the ABILITY to handle tragic medical emergencies and cover the people who don’t pay at all.

    If we had single payer, the latter would not occur. Everyone who has insurance is paying ‘extra’ to cover for the overly expensive ER visits by people who do not have insurance so they go to the expensive ER when a a MUCH cheaper immediate care facility or Primary Care physician could take care of their problem.

    I know a guy who was on a volunteer rescue crew. He told me of a lady who always called for an ambulance to go to the ER because she had no insurance and couldn’t afford a taxi or PC doctor. She found a VERY VERY expensive ‘free’ ride to the ‘free’ doctor.

  • Charles A. Bowsher

    Per-Capita income?!
    Get someone who understands that Median income and other such measures are more “truthful” than averages. I learned that a long time ago fighting zoning changes where they loved to claim that the newest mall had “average” wages of $30,000 plus. Reality was way different with the majority of jobs being minimum wage or little more.

  • Phil Bellfy

    Your guest is just flat wrong –the US does not enjoy the world’s highest standard of living, nor do we live the longest. The US is in the “Top Ten” but usually at the lower end of these kinds of data (check the “Human Development Index” of the UN). Claiming that the US is “Number One” is a comfortable fiction, but it is a fiction. People with these ill-formed notions are “in charge” of this coountry” God save us all!!

  • Christoph

    State budgets managers who choose the path of the current British model euphemistically termed “austerity” are making the false choice of cutting the intangible services of value we need for a stable and safe society such as education or healthcare while honoring contracts to private entities which drives up costs and makes the spiral of deficit deeper. Meanwhile private interests swoop in swearing all the answers further privatizing our governmental institutions. It is merely the next step of privatization of our government to our detriment.

  • Seth Gillim

    What are the four states that aren’t seeing huge deficits and what have they been doing right? Can we learn from these states, or have they already had austerity in place while the rest of the country has been in denial?
    Seth
    Winooski, VT
    (reposting b/c I’m not sure if I posted correctly the first time, thank you)

  • Phil Bellfy

    I’m from Sault Ste. Marie, Michigan (up on the US/Canada border).

  • geffe

    Lets blame the Teachers and their unions for all the ills.
    It’s amazing how so many people want to blame unions for all the ills of the nation. It’s a race to the bottom, period. Before people comment on pensions maybe they should do a little research on how they work. For instance in most states the workers PAY INTO the funds. In New Jersey one of the reasons it’s pensions are in trouble is that the state did not pay it share. Now the current governor is refusing to. People don’t seem to mention this.
    The blame the unions.

    Meanwhile we spend billions on two wars we cannot afford.
    The corporate sector looks for tax breaks and loop holes instead of paying their fair share. The wealthy also find ways to pay almost nothing if the can. The real problem is here is as a nation we seem to be a very selfish nation. We want services but don’t want to pay for it. The Republicans have been very successful at demonizing taxes and services and cutting everything.
    They think you can have tax cuts and balance budgets.
    That’s fuzzy math that even a 6th grade kid can figure out does not work.

    We need to ask some serious questions here on what’s important for the nations future. The infrastructure is falling apart, our roads are dire straits. The rail lines are antique when compared to Europe.

    It’s a mess, that’s for sure.

  • JP

    The only free ride is for the extrememly wealthy.

  • Christoph

    Evidence of the further privatization of government is evidenced by the successful campaign of Rick Scott in Florida. He was CEO of a corporation whose business model was built on medicare fraud (overcharging patients for their healthcare) and bankrupted the company when his misdeeds came to light. My mother worked for one of the hospitals he bought up and ran into the ground with this model. My mother lost 20k of her 401k during the bankruptcy while he made millions on a golden parachute; and now he is rewarded with taking the reins of a once great state? The golden parachute kind of “wealth redistribution” that nobody wants to acknowledge is also a major driver in falling budgets. As wealth accumulates to lesser and lesser people, i.e., an oligarchy, these kinds of problems will only intensify.

  • Larry

    This article will stun you.

    Click on the left where it says multimedia, Top Recipients of Public Pensions in New York, and see the 15 pages of over 100,000 pensions of New York City retirees.

    Padded Pensions Add to New York Fiscal Woes
    http://www.nytimes.com/2010/05/21/business/economy/21pension.html?_r=1&scp=1&sq=Padded%20Pensions%20Add%20to%20New%20York%20Fiscal%20Woes&st=cse

    Now I’m am for fair pensions. But this has got to be criminal when most private sector workers have no pensions.

  • http://brainmindinst.blogspot.com Peter Melzer

    Income or GDP per head does not tell anything about the distribution of wealth. The numbers do not tell anything about costs of living. The government services that cannot be supported by revenue, will have to be paid out of people’s pockets. The disposable income keeps sinking. Ever more goes toward household debt. Think only of the costs for education.

    Even though state schools may deliver most bang for the buck, the costs keep rising:
    http://brainmindinst.blogspot.com/2010/07/value-of-education-economically.html

  • BHA – Vermont

    Charles,
    In addition to the income and property tax, we have a 6% sales tax on prepared food and clothing over (I think) $100. Except in some cities it is 7%. The Rooms and meals tax is 9%.

  • denis

    Would someone please tell us what the per capita tax obligation is today compared to 10, 20, 30 years ago. Or alternatively what is the per capita tax obligation today compared to periods of sound fiscal management.

    Additionally, what percent of current revenue comes from the jobs that will be cut by all of this fanatical talk of reduce spending, reduce spending, reduce spending. It seems so short sighted!

    Denis

  • Robert

    The right has steadily and successfully demonized the concept of social wellfare for the last 30 years. The public has bought into the notion that government spending on behalf of the society is inherently bad. Yet polls show that the people still “believe” fundamentally in public eduaction and maintaining infrastructure, even aspects of health care… This is an impossible social paradox.

    The right wants to cripple the federal and state government’s capacity to run any social program.

  • TomK

    The corporate media have explained to me that the state’s problems are due to high living, greedy teachers and fireman. I hear it every day. Talk about class warfare!

    john in danvers had it right. As all the wealth has shifted to the top, with states desperate for funds, we have cut taxes at the top! amazing! Hasn’t anyone heard of “follow the money”?

    How often have you heard of a proposal for a state to raise the income tax rate at the top? No, what you hear about, if a legislator has the courage to raise the taboo subject of a tax increase at all, is sales taxes and fees. Those are regressive and fall mostly on working stiffs, exactly the wrong approach.

    Our state and national deficits come from military spending, corporate welfare via the most expensive health care system in the world, offshoring of jobs via voodoo economics “free trade”, and low taxes at the top brackets. Oops, i forget those greedy teachers.

  • SteveV

    I don’t mind paying taxes and will pay more if needed; however, I’m concerned that special interests have never seen a program they didn’t like and are just waiting for me to send more money for them to spend.

  • Charles A. Bowsher

    ThresherK @10:32- Yes we tax some foods, we also place sales tax on restaurant meals. Having lived here 96% of my 54 years we are in large part deserving of a lot the smack talk, but some is undeserved. We do feel like the countries red-headed step-child sometimes. Most recently for me when KY competed for The Department of Education’s “Race to the Top” program. It is well known that educationally we are behind and have been behind nearly every other state for decades. So it was painful and seemed a little unfair that we didn’t get any kind of consideration or “curve” as it were when it came to “grading” our entry. We finished in 11th or 12th place just out of the top ten that got the extra money. How are we ever going to really see any real improvement after decades of neglect if we aren’t given a hand up?

    I love this place, but we are oftentimes our own worst enemies.

  • Eric Lee

    I do believe we are asking for too much from our government, for too little. I, for one, am happy to pay what is necessary.

    On reasonably cutting costs, and raising revenue, I believe it is time to visit the U.S. drug policy, and the penal code. I believe that by legalizing drugs, and by moving the emphasis from punishment to cessation and rehabilitation programs, we could save an enormous amount of money.

    To those who say that we would then have a drug problem, well, we already have one. What did prohibition do for alcohol? I think it is a very dark view of society that says that everyone would then do drugs.

    It’s time to address the issues that lead to people turning to drugs, rather than pretending they’ll go away, if we just keep fighting it.

    Basically, if we legalize drugs, then costs go down, and revenue goes up.

    Thanks for the great work.

  • http://www.davidsnieckus.com david snieckus

    Comment letter for NPR’s host Tom Ashbrook

    Massachusetts Budget Chief, Jay Gonzalez sends press releases about budget chops and budget deficits. And all the media picks up on the “poor me”, “poor me” mentality, I’ll bet NPR does the same. All follow the childish whining g, “We need to cut this and we need to cut that! In a December 14, 2010 article by Kyle Cheney of the State House News Service, http://www.statehousenews.com/cgi/as_web.exe?rev2010+D+15078760 Budget Chief Gonzalez says that there is a need for a $1.5 BILLION cut! Sounds like we have no money! In the same article, Governor Deval Patrick sighs, “There are lot of very, very painful choices that will have to be made and one thing that is clear is that the overall state budget will be smaller than it is this year.” Even CBS’s 60 Minutes, December 19, 2010, did a segment on various states of the Union having to cut, cut, cut various services from their budgets.
    Spare me the deceptive rhetoric! IMHO (In My Humble Opinion) the above is something called, “selective presentation.”. While in part it may be true, it is misleading, very misleading!
    Why? Because what these reports are actually doing is informing the public about a crisis or fear that does not exist!
    Let me repeat that”.There is no money shortage in the State of Massachusetts!
    What I know about money and credit comes from studying and researching over the last eight years. I was an ASA (Army Security Agency) Traffic Analyst in Vietnam with a Top Secret Clearance and worked within the NSA (National Security Agency) Headquarters, in Fort Meade, MD. I learned how to “read” enemy radio traffic to find out exactly where they were and gave that information to U.S. Air Force pilots.
    Today I’m putting out a short synopsis of my findings of reading what is reported and written in the media and what is actually in the Massachusetts Financial Reports. (Side note; Please prove me wrong!)

    The Statutory Annual Financial Report (SAFR) for 2009 is an annual statutory accounting and yes there are deficits because the annual revenue is less than the annual expenditures. This gives Mr. Gonzalez the “right” to say the State of Massachusetts needs to make this statement, “we are currently projecting that state spending next fiscal year will need to be one and one and a half billion dollars below estimated spending this fiscal year.” True but not the whole truth! It’s like your annual salary reported every year. There is a yearly total of revenue and expenses! It is not a “TRUE” picture of your wealth. Many of us have skills, savings plans or investments including the State of Massachusetts!

    In the Comprehensive Annual Financial Report (CAFR) for 2009 there is a different picture. The CAFR shows the total accumulation of wealth in the Commonwealth over years! That is the real picture! And not much is going to the common people.,”most of it going to Wall Street investment gambling. You see friends”the Massachusetts Legislation Pension Fund has had nearly BILLIONS in assets for years! Annually only a small percent of that is paid out as retirement benefits. The rest is held tighter than Scrooge held his money in the Christmas Carol. And its restrictions can be released with a little ink on paper.

    The Massachusetts Government is awash in wealth obtained by the Commonwealth and by my reasoning should be shared with ALL the people of the Commonwealth! A small Four Percent (4%) contribution from these assets (page 56-57 CAFR 2009) can easily cover the $1.5 Billion deficit the Budget Chief is concerned about and the media is buzzing about.

    And ONE more thing, the debt service of over $2 billion can be self-funded. The State of Massachusetts can start their own bank and pay the interest to us (the owners of the Bank of Massachusetts) instead of to Wall Street. Am I making sense?

    Let’s start the bank of Massachusetts for more honest money, for more transparency and for NO MORE TAXES! It is possible: Check out the booklet, MA PUBLIC BANK” available electronically or a signed copy by calling me at 617-964-2951

    David Snieckus
    99 Crescent Street
    Newton, Massachusetts 02466
    617-964-2951

  • mjbarr

    Tennessee has no income tax
    There aren’t any employee unions
    The budget is based on sales and property taxes

    sales revenues are down, the housing market is in the tank too

    I teach at a public university, where the faculty haven’t had a raise in pay in four years
    they keep raising tuition and hiring more administrators

    the new millionaire Governor repealed the law that made him and others reveal their incomes from outside sources, what a guy!

  • Geri

    For the last 30 years – unions have only added overhead to the cost of any business and added little value – unions are dinosaurs and are on their way out as reflected in the reduction of private sector union jobs – and the only union growth is in the public sector -where salaries and benefits have ballooned – completely out of proportion to any rationale value.

  • JP

    Want to stop the denial?

    …then end the ridiculous jingoism, like “the U.S. is #1,” and “our workers are the smartest. most productive on the planet.”

    Try examining whether these types of statements actually hold any real merit before mindlessly parroting them.

    The fact is, the U.S. is far from #1 in the world by most any significant measure of likely future prosperity.

  • Aaron Gregory

    What is going to happen to future generations? Education costs are skyrocketing, and entry level pay is stagnant at best. Will future generations be able to retire and live a middle class life?

  • Charles A. Bowsher

    I’ve got news for the guy who made the final comment. A poor person does not have any extra money to pay more in taxes. Period!

  • martin hatch

    As was noted on the air, the four states — Montana, North Dakota, Wyoming, and Alaska — that are not in this predicament are drawing freely from their oil and gas resources. But they ARE paying a big price in environmental pollution, and they are benefiting from the subsidies and tax breaks that we in the rest of the United States are providing for these companies. Take those benefits away, and ask them to put aside huge chunks of cash for remediation in the future of the pollution of their land, and they would face the same problems the rest of the states do.

  • ramani

    The “Few” have to stop trying to stay in the castle and the rest of us trying to get in. The invisible system of American royalty called by the social advertizers “The American Dream,” has to evolve. Thirty years ago, American money saw China as the next gold rush and treated The USA as a mine that had given it all up. I see that we are in a perfect place to invite a change that will positively effect the whole world. This will take a vision that will place more responsibility on each citizen, inter-community economic systems that keep a percent of commerce local and modelling the whole of society around the health of the family. We, the people need to grow up and take charge of our lives at home.

  • Caleb from Somerville

    Your guest will not address the irrefutable reality that outsourcing has HURT THE AMERICAN ECONOMY and not helped it: tens of millions of jobs have been lost and wages have declined due to NAFTA, no holds barred trade with China and other developing nations. It is simple, obvious, impossible to ignore. Ross Perot’s words will remain as a harbinger: listen to the sucking sound. He speaks as if we were enormously dependent on exports of our manufactures prior to the Neoliberal Laissez Faire Globalization era of Supranational Plutocracy, and ignores the enormous, maimed elephant in the room: domestic consumption. In 1970, over 70% of the toys bought in the US were made in the US, under a relatively high real value of base labor costs (min. wage in 1968 was about $9.86 in 2010 USD). By 2007, over 70% of US consumed toys were made in China by underage, exploited female sweatshop workers, working 7 days a week, 16 hours a day, living in cramped, vile dormitories, similar to the conditions of Manchester or Lancaster in the early 19th century. There is one agenda of the unified Republican and Democrat-led Free Trade establishment: to reverse the New Deal in favor of “competitiveness”. In 2007, 27 GOP Senators (over half of the Republican caucus in the Senate) voted to ELIMINATE FEDERAL MINIMUM WAGE. Mark my words, in 10 years there will be serious proposals on BOTH sides to repeal the Fair Labor Standards Act of 1938, the National Labor Relations Act of 1935 (whatever shreds of Title 7 are left) and to privatize and then eliminate Social Security. The sweatshops and child labor will return, work, wage and age limits will be scrapped and trade unionists will be thrown in jail or fired en masse – all decreasing shipping costs on the goods the rich.

  • Larry

    What is going to happen to future generations? Education costs are skyrocketing, and entry level pay is stagnant at best. Will future generations be able to retire and live a middle class life?
    Posted by Aaron Gregory

    Future generations retire? Most people in their 50s now will never be able to retire.

    The new future in America is work until you drop just for survival wages.

    You do know the President of China Hu is coming to America to look at the auto part plants that China bought. As China buys more and more factories, real estate and infrastructure in America we are going to have to work for them like we are making the Chinese work for us now. Cheaply and without mercy.

    China Auto Parts Firms Buying U.S. Counterparts
    http://www.kiplinger.com/businessresource/forecast/archive/china-auto-parts-firms-buying-counterparts.html

  • Jim in Omaha

    If I understand the complaints of those like Brandstad, Winston Smith, etc., if business interests can manipulate the flow of tax dollars to their own unique benefit, that’s “free enterprise”, but if wage earners use their power through a union to do the same thing, it’s the “ruin of our country”.

    As to Mr. Smith’s question about what government entity other than the postal service can “continue to lose $8 BILLION A YEAR without having to reduce costs to return at least to break even”, I think the obvious answer is the military. It blows through that amount of money in about 1 day.

  • http://www.chrismartenson.com Dave

    I just spoke with the call screener who told me my point was beyond the scope of this program. I acknowledged that she is totally correct but my point is still critical to the big issue: specifically that we are not looking at a fundamentally flawed assumption, which has been stated a number of times on this program. That assumption is that we can continue to have unlimited economic growth on a finite sized planet.

    As I write I am listening to the program, many excellent points are being made (such as the shift away from progressive to regressive tax rates, government waste and inefficiency, etc, etc, etc) but none of these points acknowledges that this fundamental design flaw MUST be addressed – and the sooner the better.

    I saw a presentation by Chris Martenson who has written a 3 hour presentation titled “The Crash Course” which does a superb job of addressing this issue. I encourage anyone who wants to prepare themselves for the future to check this out on the web (available in abbreviated form for free on line).

    The screener told me my point, if it were to be addressed, should be addressed in its’ own On Point program. She told me that Tom Ashbrook looks at all our comments so, Tom, I hope you will check this out and do a program on it.

  • Larry

    As to Mr. Smith’s question about what government entity other than the postal service can “continue to lose $8 BILLION A YEAR without having to reduce costs to return at least to break even”, I think the obvious answer is the military. It blows through that amount of money in about 1 day.
    Posted by Jim

    Yea, but the Tea Party loves the military. Too bad they love their Social Security checks too. Because without slashing the military budget their checks are going to get much much smaller.

  • Aaron Gregory

    Future generations retire? Most people in their 50s now will never be able to retire.

    Those in their 50′s got us here. Those graduating now are going to be the ones to deal with it.

  • TomK

    dam teachers unions!

    “Traders’ Smaller Bonuses Still Top Pay for Brain Surgeons, 4-Star Generals” (Bloomberg),

    Even for 2008, the year the financial industry received unprecedented support from taxpayers, many Wall Street professionals got bonuses exceeding $1 million, according to data compiled by then New York Attorney General Andrew Cuomo. At nine U.S. banks, 4,793 employees got such payouts, 311 were granted $5 million or more and 47 people got bonuses of $10 million or more.

  • Sam Osborne

    Some who profit greatly within our land would in these times of challenge like to center the focus of the people’s unfinished business on taxes which they pay as a result of people and things working so well in their favor. This ignores the fact that they did nothing on their own and even their worth in dollars is dependent upon the currency held in common value by all of the people—all must respect its use for payment or receipt as legal tender of WE THE PEOPLE.

    The purpose of the government established by our nation’s Founders was to enable its citizens within the realm to share in the blessing of an organized society that was dedicated to the service of its people seen as created equal within the law of the land.

    One of the means used to ensure this purpose is via tax revenue, but this is not the only cost born by the citizenry. Each member contributes to the whole in a thousand various ways they pay their dues: as soldiers that pay the full measure, firefighters and police risking life and limb, teachers caring for others children, doctors at a minimum doing no harm and on and on in the thousands of ways each pays.

    To to start and to confine the people’s business to taxes is wrongheaded an ignores the efforts of all, particularly the majority of “common” folk that are the warp and weave of the nations fabric. The focus should be on what needs to be done to ensure that all boats rise and none are favored at expense of so many.

  • http://www.davidsnieckus.com David Snieckus

    Tom Ashbrook:
    State Deficits Nightmares can be changed into Budget Dreams!

    States can become their own banks and pay themselves the interest on ANY borrowed money.

    For Example: Massachusetts has a $1.5 billion dollar deficit!

    Guess what? It has a $2 billion dollar debt service!

    With a State owned bank we would have surplus of $1/2 billion….

    See MA PUBLIC BANK a booklet I wrote ( available upon request) and the upcoming bill for a state owned bank.

    david snieckus
    99 Crescent Street
    Newton, MA 02466
    617-964-2951

  • Isaac Bresnick

    Brandstadt,

    Small government might work very well for an agrarian state like Iowa, with low population and very low population density. Nobody’s suggesting that every state has the same needs, or that every state should have the same programs, but for States that do have a lot of programs, it is imperative that those programs be funded, and to bemoan tax increases is insane.

    Nobody’s suggesting that California’s society is “great” or “government-run,” and if you’re going to include such remarks in your response, I’d prefer if it you didn’t create the illusion that you’re addressing anything I’m saying.

    With that said, what exactly do you think the under-cabinet lighting regulation added to California’s deficit? Please, we can go on and on about silly laws, but the silly laws aren’t the problem – it’s the state programs and services. Tell your uncle to suck it up, and, please, let’s return to the topic at hand.

  • geffe

    Alaska! You have to be kidding me. This state sucks more on the tit of the Federal government than any other state.
    Without the subsidies this state would fail.
    The only other thing they have is the oil and gas revenues.

  • Terry, Watertown, MA

    There used to be pensions in the private sector. Huge corporations like Enron blew the money, leaving employees denuded of what was fairly theirs. Now public employees are being stripped of theirs. Vindictiveness? or Jealousy? I can’t figure it.

    What’s wrong with unions?! When there were unions, working families could afford a (small) house on one person’s income, and occasionally take a vacation and stay in a real motel. Whoooeee. Livin’ large back then.

    If you like 40 hour work weeks, instead of 60-70 hours, if you like the concept of the weekend, instead of working 7-10 days straight, double-shifts and no overtime, then THANK THE UNIONS. Workers own their work. They can ban together to protect their greatest asset: the work of their hands and their minds. Unions are the pushback to corporate greed and slave labor. When the unions disappear, get the chains and shackles out–the company store and the company doc decide how indebted you’ll be–forever. Too sick to work–out on the slag heap you go. Forever chained to their machine of greed. Tax the rich.

  • Sam Wilson

    Everyone is talking about “small government”, however regardless of the government size, why not look forward for an “efficient government” one that really is for the people, of the people and by the people?

    Secondly, people who claim that our spending is high, it surely may be high, but not in the arena where it is cutting, e.g. public transportation, police, fire, school, highways, bridges, mental health, health care for elderly all are basic fundamentals of a strong and healthy country, if you cut on these things, I’m not sure what will it look like 20 years or 50 years from now.

    Finally, people who really dont want any government involvement forget that, if you dont have some government involvement things will be like wild west, e.g. what if the restaurants are not required to follow the health safety practices or buildings not required to follow fire safety measures.

    The key is, there has to be a balance, and being in democracy, if we dont like the policy of the governing party or person, we can vote them out!

  • twenty-niner

    “Unions are the pushback to corporate greed and slave labor. When the unions disappear, get the chains and shackles out–the company store and the company doc decide how indebted you’ll be–forever. Too sick to work–out on the slag heap you go.”

    Where were the unions when Evergreen Solar announced last week that it was shutting down it PV module factory in Devens Mass last week, having moved most of its operations to China?

    The answer is: unions are powerless to stop outsourcing. Picket lines don’t work in front of a factory that is shutting down. Posters on this board who keep harkening back to good old days after WWII when we were the last industrial power standing, need to realize that we are no longer competing against ourselves.

  • david

    When governments become fat,they like humans, become less effective and require more attention. They become a dredge on our society. They are less productive and become more needy of other’s help. Enter the governmental mentality, the government can solve all of our problems and our needs. This mentality will bankrupt any group.
    JFK recognized this potential problem when he made his famous saying” Ask not what your country can do for you, but ask what you can do for your countey.” A wise saying???? How well did we listen??????
    A poll given on CBS Sunday Morning program 1-16-11 shows we are not.
    79% are more concerned about what our country can do for them. Only 15% are concerned about what they can do for our country.
    So sport fans, here is your problem.

  • TomK

    It’s not surprising to see the usual union bashing. I wonder if anyone thinks it’s a coincidence that, when unions were strong, we had a middle class society, and after unremitting attacks on unions since 1980, we have an oligarchy.

    Tax cuts, deregulation, attacks on unions, offshoring of American jobs and free wars have trashed this once-amazing economy, and some apparently believe that the reral culprits are teachers and firemen. How brainwashed can you get?

  • Sam Wilson

    “When governments become fat,they like humans, become less effective and require more attention. They become a dredge on our society. They are less productive and become more needy of other’s help.”

    I completely agree with your statement, however same is true for any corporation as well, just see our brush with the finance industry.

    Same went by the BP, or Enron or any other major corporation in the past that thought it was the center of the universe.

    We must have corporations, and we must have governments either side getting too big is dangerous, imho, and if I am proven wrong, I will be happy :-)

  • SteveV

    A part of this problem (outsourcing jobs) is the fact that the American consumer long ago started demanding cheaper goods. George Carlin once did a monolog on Americans buying “stuff”. And they don’t give a hoot about where it’s made, just the lowest price so they can save money to buy more stuff. And if you think the financial crisis has changed peoples habits, just walk into your local Wal Mart or watch the infomercials on TV. People are still buying “stuff” that will end up on a lawn sale next summer. Long ago we should have made “Buy American” and mantra to live by. The government could have passed all the NAFTA legislation it wanted but we had the power of the purse. Now, it’s probably to late, the infrastructure is gone along with the jobs. At times we’re our own worst enemy.

  • Sam Wilson

    “And if you think the financial crisis has changed peoples habits, just walk into your local Wal Mart or watch the infomercials on TV. People are still buying “stuff” that will end up on a lawn sale next summer.”

    I really dont understand why we are buying so much, where as I never saw a buying spree like this on my recent (last summer) trips to Germany, Spain, UK, Ireland, Japan and France.

    Are we so wealthy that we can afford to buy every new gadget that is out in the market?

  • Jayco

    All part of the plan! The rich get richer! The poor get poorer!! Nice way to go America!!

  • cory

    We’ve spoken alot lately, and rightly so, about the need for civility in our public discourse…

    Here is my problem with that.

    I normally consider myself a civil person, but when I read the comments above from brandstad and Winston Smith, I want to tear out handfulls of my hair and scream. On my best day I can’t imagine compromise or common ground with those who blame American decline on organized labor or paying the pensions of public librarians or cops who were promised them in good faith thirty years ago. Winston Smith mentions some government entity losing 8 billion dollars yearly. He doesn’t mention that during the height of our Iraqi occupation being there was costing 1 billion dollars a month! This was money spent blowing things up or building IRAQI infastructure, not funding the retirement of an American school teacher. Brandstad references the utopian America of the 1950′s without mentioning that at that time labor unions were at their peak of strength.

    Posters to this site have occasionally mentioned in jest the idea of splitting the US into a few smaller countries, and allowing folks to locate to a “province” that might more accurately reflect their beliefs. I’m beginning to see the appeal of this idea.

    I just can’t find common ground with brandstad and Winston Smith.

    Leftfield, Wisconsin

  • William

    It will be interesting to see the results five or six years from now of this massive tax increase.

  • TomK

    William, the top income tax rate is near an 80 year low. Americans are near or at the bottom of all the developed countries in total tax burden. Oromney just continued the disastrous bush tax cuts for the rich and made a “temporary” cut in the payroll tax, giving the oligarchs their best-ever line of attack on social security. What “massive tax increase” are you talking about?

    If you still believe the voodoo that tax cuts are good for anyone but the elites, why not take a look at the facts? Bush cut taxes and deregulated the financial sector. How did that work out for average Americans? imo, evidence is better than ideological theories.

  • William

    So we are undertaxed?

    My utility bill taxes;

    13.74

    Cell phone:

    Fed Universal Service Charge
    Regulatory Charge
    Administrative Charge
    State E911 Fee
    Communications Service Tax
    City Comm Svc Tax

    Property Taxes for schools went up 10 percent this
    year.

    Cable TV Bill

    Tele relay fee
    County 911 Fee
    Fcc Reg. Fee
    Local Comm Svc Tax
    State Comm Svc Tax
    State Sales Tax
    Fed Local Number Portability Fee
    Fed Universal Svc Fee
    Fed Tel Relay Fee
    Fed Interstate Tele Fee
    Gov. Access Programming Tax

    This list does not include my Federal Income Tax, Cap. gains taxes on stock trades, stock trading tax,

    So the idea that we are “under taxed” is foolish at best. There has been not much movement eliminating any of these fees/taxes and reducing spending at the City/County/State/Federal level.

    I would call the State of Ill. 67 percent increase in income taxes pretty massive.

    Oh yes, President Bush did take 5 million people off the tax rolls which was a huge mistake. The percentage of Americans not paying any Federal Income Tax is at an all time high.

  • William

    A 67 percent increase in taxes by the state of Ill. is pretty massive.

    We have what, 44 percent of Americans not paying any Federal Income tax? That is an all time high.

    Don’t the upper incomes pay the majority of the income taxes?

    The average American has spent too much money and bought homes they could not afford. Now they are paying the price of their foolish dreams.

  • twenty-niner

    “Americans are near or at the bottom of all the developed countries in total tax burden.”

    Not exactly, when you combine fed, state, and local, many locations have mid to high tax burdens as measured against other first-world countries. For example, NY residents pay more than residents of Zurich Switzerland, Denmark, the UK and Germany.

    Further, many countries with te highest tax burdens have debt-to-gdp levels that are off the charts. France, which has the highest overall tax burden as ranked by Forbes, has a debt-to-gdp approaching 89% and an external debt-to-gdp ratio of almost 200%, making France basically insolvent. In the end, the only recourse to crippling debt worldwide is going to be severe austerity measures; so brace yourself, they’re coming here and fast.

    http://www.forbes.com/global/2009/0413/034-tax-misery-reform-index.html

  • Gloria from Vermont

    Winston, truly you jest about Unions? Post Depression we were a 35 percent union force, now 13 to 15 percent and declining. This should please you. However to suggest that teacher unions are responsible for the moral decay of today’s economical climate is plain and simply wrong. If you want to see moral decay look to the Supreme Court for giving Corporations the upper hand when it comes to campaign donations. Look to the wealthy who sent our jobs overseas to avoid taxes here which left a gaping hole in the budgets. Recognize that trickle down never worked and never will. Winston, unless you are one of the elitists that are responsible for the condition of my country’s financial abyss, you should be supporting unions and protesting government always covering the back sides of the rich. There is nothing wrong with wealth as long as it supports the very country that gave them all they have. Big business and the free market killed this economy by seeking out laborers from countries willing to work for pennies per day, are you Winston?

  • gloria from Vermont

    Cory,

    There is no common ground anymore, anywhere. Just look at the posts here day after day. Have any of us been able to bring someone over to our side? No.

  • twenty-niner

    “Look to the wealthy who sent our jobs overseas to avoid taxes here which left a gaping hole in the budgets.

    Also, look to the Clinton administration, which signed NAFTA and gave China Most Favored Nation Status. Clinton was notoriously in the pocket of the Chinese, and it has paid off for the Chinese in spades.

    Frankly, I’ve heard very few politicians from any party say anything meaningful about protecting American industry. The last one that stands out was Ross Perot and look what they did to him.

  • david

    Cory,
    We do have common ground, it is called the $14 Trillion deficit that WE ARE ALL GOING TO HAVE TO PAY VERY SOON!
    Our founders left Europe to get away from Govt. control and to be independent business people and reap the rewards of their hard labor. Look what they started, America over the last 200+ years has been the leader. Now! we want to go back and be enslaved by the same system of bigger govt. which our founders fled from.
    We have created class warfare amongst ourselves, the haves and the haves not got what the haves have, so eventually one side will ask for a King!

  • Terry, Watertown, MA

    William–

    “Don’t the upper incomes pay the majority of the income taxes”?

    Yes, in the aggregrate, but take a closer look. Sure, a millionaire or billionaire pays out more taxes in number of dollars, and at a higher rate than a teacher earning $44K (starting salary here in my town–goes up to a whopping $70K or so after 30+ yrs, with advanced degrees, if you’ve got ‘em). But after taxes, that million/billionaire has a whole lot more left to live on and to feed his/her family with, pay for doctors, pay for schools, pay for fancy cars and yachts, etc., The teacher earning $44K, after taxes, has a whole lot less to try to live on, for basic living expenses. If the very wealthy paid a greater percentage of their income in taxes, there’d be more to pay teachers and nurses and firefighters, police officers, restaurant inspectors, drug rehab professionals, military wounded with, more to help families send kids to college, etc., etc. We’re not talking about second or third or seventh mansions here (a la John McCain’s). We’re talking one simple house and basic needs met on one salary, after taxes. Can’t do it. It would be worse without a teachers’ union. At least teachers get health care through their contracts. And most teachers work all year. They paint houses, work at Wal Mart, whatever, to try to make up for the little they earn at their cushy jobs teaching kids to strive for the American dream. Hah. Dream on. Dream on. . . . .

  • William

    Yes, but the rich pay so it is not right to accuse them of “not paying their fair share”. \

    So lets look at a teacher. After 30 years they make 70k per year. That is a pretty good salary. What risk do they take in their job to be rewarded with a much higher salary? What chance of their company going bankrupt and they get fired? (Certainly during an economic downturn the “last hired, first fired, are being laid off), but for the most part, they enjoy 30 years of not much risk of seeing their company fold.

    Compare them to the guys that started groupon. They pour in all their savings into their idea. This is a much higher risk, and could be beat by a smarter, or deeper pockets company like Amazon tomorrow. Should we not allow them to keep more of what they earn? They have created more wealth, jobs, etc..and a big part of it is due to the potential to make a much larger reward for their risk.

    So what is the answer? Well, I look at my cable tv bill and I see ten different fees and taxes, 4 on my cell phone bill, 10 percent increase in my school tax. I cannot think that I’m being ripped off.

    Am I stopping the pubic servant from starting his own business, risking it all, generate wealth, jobs etc..? Nope…But for many people, they don’t want the risk and go into a career with less risk. But to come back later and say “hey, I’m underpaid? and demand more…it is a hard bullet for me to bite.

  • Bill

    How come no one is talking about the overly generous union benefits that allow state workers to work for 20 years, retire at 50 years old, then collect benefits for 20-30 years at 70% of their salary. That will bankrupt any state. In our state these people get hired back the state such they get retirement pay then collect another salary from the sinking state. Usually since they are well connected to the old guard state
    machine”

  • cory

    William,

    Not everyone wants to be, has the make-up or desire to be an entrepeneur. Cops, firemen, librarians, teachers are examples. Someone who risks alot to start a business should certainly be rewarded. Should they make a thousand times more than a cop who risks his life to protect others or a librarian who teaches and helps our kids?

    Bill Gates should make more than a janitor… Both should be able to raise a family and have access to health care and higher education. Get it?

    Leftfield, Wisconsin

  • William

    Cory,

    Yes, not everyone should or can start or run a business which means that job/career should be allowed to keep the reward for their risk and talent. Sure they should make much more than a cop, fireman, etc…it is all about choice. The real danger is “who decides how much we can keep? Should a cop make more than a farm worker? Where does it stop? Got it?

  • SteveV

    Bill, Apparently I worked for 35 years in the wrong state. In my state you have to work for 30 years to reach the maximum you can collect, and that is 50%. And, as a bonus, all of that is taxed as regular income to both the Federal and State governments. And, once you reach 65, you’ll need to purchase supplemental coverage for Medicare because your State Plan is almost worthless. Perhaps there are people retired from government service in some states that are doing better, but don’t lump us all together. And by the way, if I went back to work for the state my retirement would stop and not resume until I again retired.

  • cory

    William,

    “We” decide. It is the beauty of our democracy.

    Do you think civilization requires engineering? Imagine capitalism as a powerful locomotive. Should there be an engineer determining speed, overseeing maintainance, and calculating fuel usage?

    I don’t begrudge anyone for the accumulation of wealth, so long as a balance is maintained that allows a continuation of our civilization for my (and your) children.

    Leftfield, Wisconsin

  • William

    Cory,

    But you still have the problem of “Who is “we”? if you elect people that reflect your vision or idea of “what is fair?” that is great, but what if the “other guy and is on the receiving end of the “we” crowd and they tell you “this is fair, maybe not for you, but for us”. The USA been so successful because of the idea that anyone can become whatever they desire to be or work at. To take that away or limit it, would be a huge mistake.

    I don’t want to tell anyone what career they should pick. It is their choice. But, I also don’t want to punish the guy that is the risk taker, wealth creator, job creator etc… and require that he “give back” or “give up” to support people that want an easier career at my expense.

  • BrettG

    -NYC

    If customers don’t have $$ to buy goods & services, the “job creators” don’t have a need to create jobs.

    Unless domestic demand is enlarged massively & quickly, our infrastructure, education, business & public health will all suffer.

    The “demand” created by the top 5% cannot support our local businesses, governments, NGOs & other services.

    We need a domestic economic policy to rebuild domestic manufacturing, update & replace infrastructure from water systems, electrical grids & other “old” technology to a true world class & secure “Net 3″ that will at least put us on a level with Finland & Estonia.

    “Austerity” kills off demand & puts more nails in the “recovery”

    And everything mentioned above is a Matter of National Security! That’s Economic, Societal & International security.

  • Dave Allen

    Well distroy the economic pump of the nation “the manufacturing base” what do you expect. Thanks to Nafta and better taxes in other countries you have distroyed the tax base drawn from this group of workers.
    This reminds me of where I grow up in Jackson County, Michigan, in the 70′s the local government did not want to continue the tax breaks to the manufacturing companies in the county. We lost Goodyear, Clark Equipment, Kelsey Hayes, Yardman, Tire Wickwire, Tompkins & Johnson, Jackson Crankshaft and on and on. We went from three class A schools three class B schools on the verge of becoming class A and some big class C and D schools. Now there is only one class A school a couple of B schools and some small C & D schools sum 30 plus years later still no change. We need to lower the business taxes to create jobs.
    Executive compansation needs to be tied to longterm payouts to prevent the cut and run and to encourage reinvestment back into the companies.

  • geffe

    William your analogy is a straw man if there ever was one.
    Without teachers there would be no Bill Gates or any other CEO’s for that matter. Your arguments are so infuriating.
    You say you don’t want to pay taxes on your cell phone.
    Don’t own one. I don’t have cable TV, why? Because I don’t need it and I don’t want it. Then you complain about the local taxes being raised for the school system without doing any research to find out why. You make blind assumptions based on your hatred of school teachers and unions. Straw man argument is there ever was one.

    The corporate sector has been slashing benefits for the last 20 years and most wages are flat. Saying that people who work for the state can retire after 20 years and collect 70% of there salary sounds pretty dubious to me as well. In my state of MA you would be lucky to get 40% at 20 years. Do people abuse the system, yes. They steal and cheat in the private sector as well. Or does that not count in your world.

  • Charles A. Bowsher

    Ramani @ 11:00 Well said.

    Tom Ashcroft (any relation to John? just kidding!)
    Dave @ 11:03 makes an excellent point for a future show. My shortened version of it is as follows:

    “We live on a limited resource in the middle of nowhere, it’s time to change our thinking.”

    That means to me that humankind needs to be planning on a time horizons of 50, 100, 500, 1,000 and 5,000 years. I am not kidding. I don’t know what the exact percentage of the earth’s resources we have used in the last 100 years, but I believe it is a frightening number (something like 50% or more I believe). We need to open our eyes. I have no children yet I still feel a responsibility to have helped set the world on a better path than when I got here, and at the very least to undo any damage I have done while I was here.

    Hey, how about that for a life’s goal? We can call it “Life Neutrality”(copyright 2011 by Charles A. Bowsher)
    Each of us now has the responsibility to undo our own damage.

    Cory@ 3:22 I can’t seem to see any common ground with Winston or Brandstaad either, so I pray for them. I pray they get boils, (no, I did not mean to say that, did I just say that? shame on me, not very civil.) I pray they get a chance to see and experience life from another, less fortunate perspective, yeah, that’s a reasonable prayer.

    William @3:37 What tax increase? If you are calling Health Care Reform a tax increase stop drinking the Kool-Aid

    William @ 6:24 You cite Groupon as an example of entrepreneurial zeal yet at what cost to the Restaurants and their staffs? From what I remember of the Groupon show the restaurant owners and employees were not that crazy about it. It’s like blackmailing a business to give you a special discount because your “group” is larger than average. Why are we such a pushy, bully-like society?

    Brett G @ 9:05 and geffe @ 12:37 am 1/19 RightOn!

  • Charles A. Bowsher

    And Tom Ashbrook (sorry about the Ashcroft), anyway, please try not to conflate numbers like you did today. I think any statistician will say it is deceptive or misleading at best to call a tax increase from 3% to 5% a 67% increase. While it is true mathematically, it is a speech or debate trick. I was also surprised no one ever brought up fact that the 2% increase exactly matches the 2% reduction in Federal payroll taxes.

    I wish our state were as smart as Illinois. I love KY but we are habitually short-sighted where it matters most.

  • Sam Wilson

    “I don’t want to tell anyone what career they should pick. It is their choice. But, I also don’t want to punish the guy that is the risk taker, wealth creator, job creator etc… and require that he “give back” or “give up” to support people that want an easier career at my expense.”

    Well going by your example of limited or small government, business must flock to Somalia or elsewhere there is no government and zero taxes, right? facts show things otherwise.

    Also, I have been long wondering why on earth my premiums of Auto Insurance and Health Insurance is being used to treat other people or repair other peoples cars..

    Why on earth I have been punished???? Isnt this Socialism?

  • Gloria from Vermont

    William,

    I feel as though you do not understand Cory’s point of view. So I will try to help you.
    This country has always had an issues with Teachers, why, I don’t know. Jealousy perhaps, ignorance, perhaps. I wondered after I read your comments if you went to school? Did you not accomplish all you wanted to and now you feel it is the fault of teachers? Maybe your parents were negative about education. Maybe if teachers could be paid by the private sector as opposed to relying on property taxes you would accept their profession more. And it is rather discouraging that people like you and many others have no clue as to how all success begins…it begins the first day we walk into that school and meet our Kindergarten teacher. From there we learn and grow and the potential to be anything we desire comes after years of studying. Let me ask you this…do you think any successful business person is going to hire someone to work for his company who has not been at least educated through high school, can do basic math, read, write and use the many other tools we receive from being educated? We expect our teachers to continue educating themselves, we want them to keep our kids safe and sound, in many cases we expect them to take over parenting duties because we don’t like to do it ourselves, then when our kids fail, we recite how over paid teachers are and what a cushy job it is. Well William, if it is such a glamourous position you should go to school, get a BA, an MA and get that over paid of teaching yourself.

  • TomK

    William, give me a break with the obvious talking points. Yes, the upper incomes pay most of the income taxes. However, since they now have more of the income than since the 1920s, that still corresponds to one of the lowest tax RATES in our history. The idea we once had was that higher incomes would pay at a higher RATE, ie progressive taxation. The lack of a progressive tax structure is great for the oligarchs, but very bad for the rest of us.

  • William

    TomK – The 44 percent that don’t pay any Federal Income Taxes are not too upset about not paying “their fair share”.

  • Wiliam

    Gloria – Wow…that is a pretty good cheap shot from you. So if I say anything negative or even question a teachers salary or performance “I’m not educated” enough to understand the teaching profession? A rather “elitist” attitude on your part.

    Why is it that teachers are always so angry and thin skinned when questioned about the performance or lack of improvement in our education system? Certainly, as a business owner I need people that can function, but if I can’t find that person can I ask for my money back from the education system? Or perhaps, put a tax on you to cover my increased costs to train an employee?

  • TomK

    William, did you ever hear “follow the money”? Those who don’t pay income tax, but pay plenty of other taxes, don’t have much to give. However, the concentration of income in the top 1% is soaring. Harping on those at the bottom is simply misdirection.

    The plain truth is that we are in an anomalously low tax environment. It’s insane to worry about deficits without taking this aspect of the revenue side into account.

    http://www.usatoday.com/money/perfi/taxes/2010-05-10-taxes_N.htm

    Tax bills in 2009 at lowest level since 1950

    “Federal, state and local income taxes consumed 9.2% of all personal income in 2009, the lowest rate since 1950, the Bureau of Economic Analysis reports. That rate is far below the historic average of 12% for the last half-century. The overall tax burden hit bottom in December at 8.8.% of income before rising slightly in the first three months of 2010.”

    And, the top marginal rate is near its low point since the first great depression.

    Deficit = tax revenue – spending. The right wants to talk about spending only, but that is not real. Why is it a surprise that after trashing the revenue side since 1980 we have a deficit?

    Of course there are other causes, the job-killing deregulation of the financial sector, the free wars, the offshoring, the corporate welfare maintaining the world’s most inefficient health care system. But, keep is simple. Cut taxes enough, Dr Watson, and I deduce that there will be a deficit.

  • Rob in Seattle

    How can an economist like J. Fred Giertz say that the tariffs aren’t the answer and the problem in the U.S. is a lack of education while at the same time admitting that China is protectionist? Seems to work just fine for China – and Japan and Germany and India. It’s time for the U.S. to stop pretending we can fund growth in every other country in the world while ignoring our own house.

  • Rob (in NY)

    TomK at 3:16PM,
    While federal taxes/ spending is a little off this discussion topic, I wanted to clarify a point in your earlier post that I believe is a a little misleading. Yes, federal taxes as a percentage of income are close to post WWII lows e.g. the number I have from the Treasury is about 16% of GDP), but this is at least partially due to the deep recession. Without any change in existing tax laws, this percentage will likely revert back to the post WWII average of about 18% or 19% (e.g. which also matched tyax collections from simply based on economic recovery (e.g. more people fall in higher income brackets, stock market recovery boosting capital gains income, etc..). The real issue is that federal spending has increased from the post WWII average of 19-20% of GDP to about 24-25% of GDP so federal spending is at a post WWII high relative to GDP, while tax collections at are a post WWII low.

    I have stated many times that I like the approach used by the Simpson/ Bowles commission (e.g. which both the hard left and hard right hate so there is probably something that makes sense), which was to eliminate most or all deductions to a point where the statutory rate is closer to the effective rate.

  • Rob (in NY)

    To Gloria from Vermont, on January 19th, 2011 at 11:26 AM,

    I wanted to reply to a comment you made earlier to William. First, let me start by saying that I value the work of most teachers and can point to several teachers and athletic coaches who positively influenced my life. I would also point out that there is not one universal retirement system for teachers, rather state by state (or even county/school district by school district system). Several comments made above refer to a teacher’s salary being $75k, but I doubt this includes the present value of the state’s contribution to the pension and other retirement benefits, which in some cases is more than 25% of annual compensation.

    I am not familiar with your teacher pension system in Vermont, but here in NY and NJ many teachers are covered by pension programs that allow the teacher to retire with 70-80% of his or her final year’s salary after working only 25 years. At least here in NY, the pensions for police officers and firefighters are even more generous. Some of these pension actually pay out 75% of base salary after working only 20 years.
    I am not hostile to teachers or other public employees, but I do demand that pension/retirement systems be based on economic reality. This includes properly funding pensions annually, rather than pushing the cost to future taxpayers. It also includes disclosing the actuarial value of pensions and post retirement benefits for public employees at the time contracts are negotiated to the taxpayers. It also includes having realistic provisions for retirement ages (e.g. there is no reason teachers cannot work until their early 60s). While I agree with physical and mental disability provisions to protect police officers and firefighters from work related injuries, there is no reason retirement ages cannot be raised for most of these employees either.

    In summary, I want to treat teachers and other public employees fairly and with respect. However, as a taxpayer who pays for their salaries, I am very concerned about the huge liability associated with these pensions. It is not too much to ask that these pension programs are aligned with the reality of the private sector as well as with economic reality.

    Here is the link to two good recent articles appearing in the Economist that discussed this issue:
    http://www.economist.com/node/17849199?story_id=17849199
    http://www.economist.com/node/17851305?story_id=17851305

  • William

    TomK – Don’t you think there is a danger of the “44 percent” voting themselves even greater “goodies” since they don’t pay for them? Everyone should pay something in Federal Income Taxes just to keep everyone “in the game”.

    Why raise taxes on the productive members of society so it can be spent on unproductive programs?

  • TomK

    Rob, a flat rate will do nothing but pour gasoline on the fire of inequality that will incinerate the USA. It would be a disaster. Our top priority must be to return to our traditional tax structure, with the top brackets paying at higher RATES.

    It is annoying to constantly hear (not accusing you) about all the taxes that the top 1% or 0.1% pay. Anyone who talks about that without also mentioning the skyrocketing share of all our income that the top 1% now have is either bamboozled or trying to bamboozle you. The RATE is the taxes divided by the income, and when you divide by the soaring income at the top you find that the top rate is low.

    It’s a little like this. Suppose the top 1% got ALL the income, which I suppose would make some on the right very happy. Then they would also be paying all the taxes. Would you want to argue that the system was “penalizing the rich” because they were paying all the taxes? I don’t think so.

    To keep this somewhat on point, I think a major problem for the states is that they do not have progressive income taxes. So, when anyone musters the courage to propose a tax increase, it’s a regressive one that hits the average citizen.

    I agree that a big part of the problem is simply the depression. BTW, the drop in GDP causes debt/GDP to jump even with no new spending, so the right is dishonest when they wave debt/GDP at you as evidence of Obama’s socialist big gub’mint spending.

    A little tax humor:

    http://www.ritholtz.com/blog/wp-content/uploads/2010/04/top-rate.jpg

    Of course, Obama, who is turning out to be just another corporatist, didn’t really try for that dreaded socialist 40%….

    Tom in Boston

  • Rob (in NY)

    TomK,
    Just to clarify, I am not promoting a flat tax rather a flatter but still progressive tax system that gets rid of deductions, tax shelters, etc… This is consistent with what the Simpson/ Bowles commission proposed and will get rid of much of the abuse in the system and treat tax payers fairly. I would also add that many on the left point to Germany and other EU nations when discussing models of what they consider a proper social safety net. However, most of these nations fund a large part of this social spending through a consumption based VAT, which by definition taxes middle income tax payers more. It is not possible to generate the income necessary to fund this type of social safety net without a broad based VAT.

    As someone commented earlier, this budget deficit/national debt is our common ground. It will destroy our economy for the next generation if we do not get it under control.

  • Rob (in NY)

    TomK,
    One other point. I agree that references to President Obama as a Socialist are absurd, but the reference to the high statutory rates of 70-94% from +-1934 through the 1970s is also an irelevant distraction. The tax code had far more exemptions during this period to the point where nobody paid these high statutory rates so they were irrelevant. As an example, the 1940 rate of 81% applied to income in 1940 dollars over $5 million, which would be equivalent to about $76 million in 2009 dollars (and only ordinary income was taxed at this rate). The dollar amount was lowered in the 1940s, but exemptions were also expanded.

    This would comparable to having a tax rate today of 80% on income over $75 million, but excluding capital gains, entertainers, and anyone else who makes over the amount of income subject to the 80% rate!! The approach of a broad system with lower, but progressive rates that people actually pay and NO DEDUCTIONS would actually raise more revenue for the Treasury. We can agree to disagree here.

  • Mimi

    Being a teacher, I feel sick at the negative comments towards my profession. I switched my career from software development in the financial industry where I was making 6 figures with annual 20% bonus to teaching where I now make less than $40K a year, and I have never worked harder!! I love teaching and engaging students to learn. Yes, there are poor teachers just like every industry has its strong workers and its weak workers, but for the large part, almost every teacher I know is dedicated and does it for the love of working with kids.

    Bash the unions… go right ahead. Before unions, teachers could qualify for food stamps their pay was so low. Summers off… good teachers take that time to develop their next year’s curriculum and to improve their teaching strategies. Teachers get the blame for poor student performance, teachers get the blame for the budget crisis… etc, etc.

    So I ask, do you want professional, dedicated teachers or daycare workers? I ask because professional, dedicated teachers are not free. And, even though many could earn more money in private industry, as I previously stated, they do it because they love teaching.

    Until you have actually done a teacher’s job… stop bashing and complaining… go to your local school and volunteer. Get to know the school. Get to know the hard working staff and teachers. Get to know the students.

    Oh, and I calculated my pay based on the numbers of hours I work…. $8.00 an hour!!!

  • http://www.thought.org Gary Kline

    Perhaps the truest measure of a society is how well it maintains its infrastructure. Part of the modern infrastructure involves roads and rail, water and power, and providing for the care of every resident. It seems to me that we have all fallen short of measuring up… . If we want to survive as a culture, it is time to pay up; and yes, cutting any and every bit of waste.

    gary kline
    Seattle

  • Rob (in NY)

    I am not sure whether this thread is still active, but as someone who generally leans Center/Right, I can probably find common ground with some of the comments related above from Gary Kline and others ergarding to maintaining our infrastructure.

    I would argue that the federal government (and states) should have a separate budget for day to day operations (e.g. including entitlements and most defense) and capital spending. This would illustrate when the nation is underinvesting in our infrastructure as one would see lower capital spending relative to depcreciation, more assets with $0 book value that are fully depreciated,etc…. Expensing capital assets over iruseful life more accurately reflects the fact that these assets have an economic value beyond one budget cycle. It would also force public officials to justify capital expenditures by looking at projected future economic benefit. This is how any sane enterprise manages its affairs, whether it is a private business or government.

  • geffe

    It should be interesting to note that Texas has budget deficit problems that are pretty huge. This is a state run by Republicans with tax cuts and spending cuts on education and health care. Seems to me that if this is proof that the Republican idea on tax cuts and cuts in everything else does not work as well.

    http://www.nytimes.com/roomfordebate/2011/01/19/whats-the-matter-with-texas/a-self-inflicted-mess?scp=7&sq=texas%20state%20deficit&st=cse

  • Ricky J

    One of the approaches to balancing state budgets is to hobble benefits that members of some unions receive. Today, 2/28/11, Cokie Roberts speaking on the NPR morning news, referred to ‘plastic surgery’ for police as “outrageous”. To me, Ms. Robert’s characterization of this benefit was outrageous. Almost all of the use of plastic surgery benefits for police and fire fighters responds to disfiguring injuries experienced while performing their duties, I suspect. If this is true, Ms. Roberts should apologize and re-characterize the benefit as “essential and fitting”. On the other hand, if there is widespread misuse of the benefit for personal purposes unconnected to job duties, then this supposition needs to be researched quickly and the results made public.

  • Ruth Perkins

    And here  in Massachusetts, Gov Patrick is set to push raising taxes even more and including the payroll tax.

    So SQUEEZE the working class even more…and after the Feds raised  payroll taxes on the working class just this month…for those of us who have acquired new, low wage, and usually part/time jobs without benefits…and we’re the lucky ones….OUCH!

    How about increasing the hourly wage to today’s cost-of-living?
    By the way, how’s Wall Street doing? 

    Corporations won’t have to find cheap labor overseas anymore.
    It’s right here, in the United States…low wage, no benefits, no unions, no cost of living wage increases, no voice and all for the Corporations…who are people too….

ONPOINT
TODAY
Sep 2, 2014
U.S. Sen. Mitch McConnell, R-Ky., talks with Mark Wilson, event political speaker chairperson, with his wife Elain Chao, former U.S. Secretary of Labor, at the annual Fancy Farm Picnic in Fancy Farm, Ky., Saturday, August 4, 2012. (AP)

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Sep 2, 2014
Confederate spymaster Rose O'Neal Greenhow, pictured with her daughter "Little" Rose in Washington, D.C.'s Old Capitol Prison in 1862. (Wikimedia / Creative Commons)

True stories of daring women during the Civil War. Best-selling author Karen Abbott shares their exploits in a new book: “Liar, Temptress, Soldier, Spy.”

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This Friday, Aug. 22, 2014 photo shows a mural in in the Pullman neighborhood of Chicago dedicated to the history of the Pullman railcar company and the significance for its place in revolutionizing the railroad industry and its contributions to the African-American labor movement. (AP)

On Labor Day, we’ll check in on the American labor force, with labor activist Van Jones, and more.

On Point Blog
On Point Blog
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