New Revenue is Needed to Invest in Economic Recovery

[Youngstownshrimp]

It's already happening, the creditor nations are like banks, dictating where we put money we borrow from them and like you have seen, it is not flowing thru HUD funds to us in Youngstown.  No, they look at our lazy plan to create another landbank and demolish more houses and they look back at all the years we demo'd and did nothing with the vacant land.  We couldn't even come up with a plan to use the land that has been sitting in our old city landbank and then the MVOC which has no track record comes in with the CDA and says let's create another landbank.   No folks, we need to quit trying to BS everybody and really roll up our sleeves and come up with a REAL land plan.

[sfc_oliver]

What will happen when we run out of other peoples money?

[Youngstownshrimp]

When I worked in the defense industry long ago, there was a saying, "If the Navy has a problem, they throw money at it and hope it goes away."  The problem, today is that all government in our great land has no money.  And what is worse, all the grant and subsidy suckers do not even realize it!  It is funny to watch all of them here and there, keep trying to write grants, ask foundations and kiss butt to try to live off the handouts.

[irishbobcat]

Colorado Springs: Conservatism's Shining City
By Terrance Heath

February 5, 2010 - 4:12pm ET


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If you've ever wondered where conservative economic policies like permanent tax cuts for the wealthy, slashed social services and government spending are supposed to lead us, look no further than Colorado Springs.

David Sirota's description of what's happening to that conservative stronghold should serve as a cautionary tale.

When the so-called tea party movement's anti-tax activists refer to the abstract concept of conservative purity, we can turn to a microcosm like The Springs (as we Coloradoans call it) for a good example of what such purity looks like in practice—and the view isn't pretty.

Thanks to the city's rejection of tax increases—and, thus, depleted municipal revenues—The Denver Post reports that "more than a third of the streetlights in Colorado Springs will go dark; the city is dumping firefighting jobs, a vice team, burglary investigators, beat cops; water cutbacks mean most parks will be dead ... recreation centers, indoor and outdoor pools [and] museums will close for good; buses no longer run on evenings and weekends; [and] the city won't pay for any street paving."

Meanwhile, even with the Colorado Springs Gazette uncovering tent ghettos of newly homeless residents, the city's social services are being reduced—all as fat cats aim to punish what remains of a middle class. As just one example, rather than initiating a tax discussion, the CEO of The Springs' most lavish luxury hotel is pushing city leaders to cut public employee salaries to the $24,000-a-year level he pays his own workforce—a level approaching Colorado's official poverty line for a family of four.

This is what Reaganites have always meant when they've talked of a "shining city on a hill." They envision a dystopia whose anti-tax fires incinerate social fabric faster than James Dobson can say "family values"—a place like Colorado Springs that is starting to reek of economic death.
Well, maybe it isn't a function of government to provide streetlights, municipal water, parks, swimmingpools, fire department, police protection, and paved roads. Or it won't be, anymore. Someday, we'll have to pave our own roads. Scratch that. We'll be free to pave our own roads and hire our own police, etc.

[Rick Rowlands]

The answer to every problem is "more money"! I commend the states that are making cuts in services.  The economy will never recover if the capitalists do not have any capital to invest!

[irishbobcat]

New Revenue is Needed to Invest in Economic Recovery

In a Progressive States Network report last week:

As 48 states confront monetary shortfalls this fiscal year, the budget will undoubtedly be the predominant focus of lawmakers.  In fact, the Center on Budget and Policy Priorities (CBPP) estimates that states will face cumulative deficits of approximately $350 billion in 2010 and 2011.  The downturn has also taken an enormous toll on tax revenue.  Mark Zandi, Chief Economist at Moody's Economy.com, reports that state and local tax revenues have dropped 9 percent from last year, "the largest decline on record going back to just after World War II." 

During an economic downturn, progressive revenue generation is far preferable to deep cuts, as it allows states to provide funding for essential programs, pump money into the economy, and protect working families in this time of hardship.  A budget that relies too heavily on cuts will not only force layoffs of state employees, but will also cut off funding in the state for crucial services, thereby reducing spending pumping dollars in the private sector.

Peter Orszag, Director of the Office of Management and Budget, and Nobel prize winning economist, Joseph Stiglitz confirm:

[T]ax increases on higher-income families are the least damaging mechanism for closing state fiscal deficits in the short run.  Reductions in government spending on goods and services, or reductions in transfer payments to lower-income families, are likely to be more damaging to the economy in the short run than tax increases focused on higher-income families.

As a recent report by the Economic Opportunity Institute denotes, "every dollar of state spending generates $1.41 of economic activity.  Much of that spending - 62%, or 88 cents - boosts the private sector.  Cutting state spending means fewer purchases from suppliers, reduced contracts with service providers, less money from public and private employee paychecks circulating through local businesses - and of course, fewer public services."

Also, spending on programs that assist low and middle-income families is smart economic policy.  By assisting working families, who will more readily spend their funds on basic necessities, the government is boosting short-run demand and fostering market activity.  For instance, Zandi finds that increasing food stamps spending creates $1.73 in demand for each dollar spent by the federal government.

Cuts Hurt the Economy:  Unfortunately, several states have responded to the fiscal crisis with deep service cuts:
28 states instituted cuts that will limit low-income children's access to health care
24 states have slashed services for the elderly and disabled
36 states have reduced funding for higher education
42 states implemented cuts that affect state employees, including 26 that have hiring freezes, 14 that have announced layoffs and 26 that have decreased wages
If new revenues are not generated, further cuts will continue a cycle of job layoffs by states, lower spending on crucial programs, diminished economic growth, and deep budget cuts.  The Economic Policy Institute (EPI) provides the following chart illustrating the danger of state budget cuts as they ripple through the economy; teachers, nurses and police are laid off, state funds supporting private sector activity are reduced, and individuals receiving state support stop spending in their local communities.

Working and Middle Class Families Have the Highest Tax Burdens On Average:  A common misconception about state and local taxes is the idea that the wealthy have incredibly high tax burdens.  The reality is the richest taxpayers have not been contributing their fair share for years.  When you factor in sales and excise, property, and income taxes, states tax working families far more heavily than richer individuals, according to Who Pays?, a report from ITEP.  As the graph below highlights, the lowest 20 percent of earners pay about 11 percent of their income in state and local taxes while the top 1 percent pay a little over 6 percent of their income to state and local governments. 

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We need to raise revenues in ohio to avoid loss of services. Somebody tell

Ted Strickland that. He cuts programs as bad as a Republican!