American Forum Op-Ed

Riane Eisler

AMERICAN FORUM


By Riane Eisler and Rene Redwood

A financial debt can be paid back. But the debt we’ll owe our children if investments in health, nutrition and education are slashed is irreparable. Investment in human infrastructure – providing the human capacity development for optimal economic productivity and innovation through both government and business investments – is essential for success in the post-industrial economy, and this should be our policymakers’ guiding economic principle.

Rene Redwood

It’s up to us to ask the hard questions: Why are we being told we can’t raise taxes on the rich, but must cut wages for teachers, nurses, child-care workers and others on whom our future depends? There is no evidence that lower taxes on corporations and millionaires “raise all boats,” or that massive cuts in social services have ever helped people in developing nations rise from poverty. The opposite is true. It is countries like Canada, Sweden, New Zealand and Finland that have made commitments to caring for future generations that have risen from poverty to prosperity. And today nations such as Brazil, South Korea, and other “emerging advanced economies” are heavily investing in their people.

Why are we told that cutting social programs is the road to prosperity, when our past prosperity was the result of the very opposite?

At the beginning of the 20th century, the United States was what we today call a “developing country.” Except for the super-rich, our general living standard was abysmal: child and general mortality rates were extremely high, as was poverty. Then we invested in prenatal and child health care such as vaccines; abolished child labor; mandated not only primary, but also secondary public education; and promoted college education through the GI Bill for returning soldiers. These kinds of government expenditures, along with Social Security, Medicare, Head Start and other government programs to care for and educate our people had a huge return on investment for our people and nation.

Today, largely as a result of retrenching in such public expenditures, the U.S. has higher child mortality, maternal mortality and poverty rates than any other developed nation. According to a 2007 UNICEF study, the U.S. ranked 24th of 25 developed countries with children living below the national poverty level. By comparison, the Netherlands, Sweden, Denmark, Finland and Spain topped the list. The U.S. Census Bureau estimates that poverty afflicts roughly one in six American children—some 13 million youths, a figure that’s expected to rise as poverty trends continue to soar.

In 2009, more than 4.4 million single mothers earned wages below the national poverty level and were barely able to supply their children with basic needs. That number of women had increased 6.7 percent compared to the previous year, according to census figures. The kinds of cuts now proposed—especially cuts to programs to help impoverished families with children—will push us down even further.
By contrast, investing in education, health care, child-care and eldercare drastically reduces unemployment, poverty, public assistance, spending on prisons -- and at the same time provides a trained work force and higher tax base. According to a recent NBC/Wall Street Journal poll, 37 percent of Americans believe job creation/economic growth is our nation’s No. 1 issue, and only 22 percent named the deficit/government spending as the top. What’s more, while Americans find some budget cuts acceptable; they adamantly oppose cuts in Medicaid, Medicare, Social Security and K-12 education.

That’s because most of us know that our most important assets are our people. If we don’t invest in human infrastructure, we cannot be economically successful.

We urgently need a realistic long-term perspective on how national and state deficits are calculated. The human capital deficit created by cutting social programs will be irreparable. By contrast, benefits to individuals, families, businesses and society at large from investment in human infrastructure will accrue for generations.

There’s an old saying that an ounce of prevention is worth a pound of cure. Our priorities should be exactly what the “deficit hawks” are putting on the chopping block. Cutting those programs is criminal behavior, not sound policy.


Riane Eisler is president of the Center for Partnership Studies (www.partnershipway.org) and author of The Real Wealth of Nations and The Chalice & the Blade. Rene Redwood is CEO of Redwood Enterprise in Washington, D.C. (www.redwoodenterprise.com)

Copyright 2011 (c) by The American Forum. 5/11

TEXAS LONE STAR FORUM

By Scott Chase

As a small business owner, I am worried our Legislature is going to make unnecessary and deep cuts to public services that local businesses and all Texans need. Yes, our state has a revenue shortfall, but we also have choices about how deal with the shortfall. We can take a balanced approach that uses our Rainy Day Fund.

My fellow business owners in the Oak Cliff Chamber of Commerce are concerned about unnecessary cuts too. Our chamber includes over 600 small business owners in the Dallas area. We were the first local chamber in Texas to call for the State Legislature to use the Rainy Day Fund to help balance the budget instead of the irresponsible “cuts-only” approach that the Legislature is considering.

The cuts-only approach of the Legislature is wrong for many reasons. All businesses, but particularly small businesses, such as the members of the Oak Cliff Chamber, know that spending on education, health care, roads and bridges, job training and the environment is an investment in the economic future of Texas. This investment will result in a more educated, healthier workforce and a modernized infrastructure. The large cuts in these areas being presented by reckless legislators will lead to a less competitive business climate in Texas, lower wage jobs and economic stagnation.

The cuts will affect our economy, not just in the future, but also right away. According to official legislative estimates, the cuts-only approach will also lead to over 300,000 fewer jobs, pushing unemployment up over 10 percent in Texas by 2013. Deep cuts to health care at the state level will mean increased costs of indigent health care for local taxpayers and higher health insurance rates -- both costing businesses.

But beyond the impact on our economy, the cuts-only strategy will have a detrimental impact on our society. Cuts in health care mean less healthy children; cuts in education mean fewer college graduates; cuts in transportation infrastructure mean longer commutes for workers and increased costs to move goods for businesses; and cuts in environmental monitoring mean dirtier air and water. That should not be the future of Texas either.

In the past, when Texas faced budget deficits, our state recognized that a balanced approach was necessary to keep the state moving forward. The Governor, Lt. Governor, Speaker, and Legislators all worked together to find a solution that was in the best interest of all Texans. But, in the current Legislature, our future economic development and the health of all Texans is threatened by the imprudent cuts that do not have to be made.

Using our $9.4 billion Rainy Day Fund is one way to minimize damaging cuts. Texans created the fund by constitutional amendment for the very situation our state is in now -- a revenue shortfall created by an economic downturn. In the first 18 of its 22 years, the fund never had a balance of more than $1 billion. In fact, the Legislature has spent the entire fund several times, including two times approved by Governor Perry. This is safe to do because the fund automatically replenishes from oil and gas severance taxes. Prices for oil and gas are likely to stay strong, rebuilding the fund quickly. Keeping billions in the Rainy Day Fund when we need to protect Texas from the damage of this recession is foolish.

The Oak Cliff Chamber of Commerce has gone on record asking our state Legislature to use the Rainy Day Fund as part of the balanced approach to solving our revenue crisis. Has your chamber of commerce gone on record in support of a balanced approach?

Chase owns his own solo law practice in Dallas and has represented small business owners, as well as public companies, in Texas for over 30 years. He is chair of the Legislative Affairs Committee of the Oak Cliff Chamber of Commerce and has served on the Legislative Affairs Committee of Texans for State Parks.

Copyright (C) 2011 by the Texas Lone Star Forum. 4/11

TEXAS LONE STAR FORUM

By F. Scott McCown

Maybe you’ve heard that our state is short of money because of the recession. Perhaps you think the state can just cut spending or that the problem doesn’t affect you. Well think again.

Our state isn’t just a little short of money. Merely to maintain critical public services, at their current levels, costs at least $27 billion more than we have. In other words, we only have three-fourths of the money we need.

If you try to fill this big of a hole with only cuts in spending, you cut into the state’s muscle and bone.

Instead, Texas needs a balanced approach. That means that instead of only cuts in spending we need to use the state’s Rainy Day Fund while adopting some modest new state revenue measures.

Unfortunately, legislators so far have proposed nothing but cuts. They would rather fire teachers and crowd classrooms and deny financial aid to all new applicants at community colleges and state universities.

Legislators would even make deep cuts to health care for children, the elderly, and people with disabilities. They would reduce payments to doctors, hospitals, and nursing homes -- compromising care and forcing local taxes and private health insurance premiums to go up.

The proposed state budget doesn’t just shortchange education and hurt folks who can’t help themselves, such as the elderly in nursing homes or abused children in foster care. It also seriously undermines the Texas economy -- today and far into the future.
For one thing, the proposed budget would substantially increase unemployment, and not just in the public sector. Cuts this big send a wave of job loss throughout the economy, as the state cancels contracts and reduces payments to people with whom it does business. Before long, folks who think they have no connection to state government are laid off because all of the other newly unemployed are buying fewer goods and services.

We’re talking about a lot of jobs here. Dr. Ray Perryman, a renowned Texas economist, estimates that every job directly lost as a result of state budget reductions takes with it roughly 1.5 more jobs.

The proposed state budget would eliminate over 9,200 state jobs right off the top. Then the chain reaction starts. Reduced state support to school districts, community colleges, and state universities means they too throw people out of work. School districts alone would lay off as many as 100,000 people, one of the state’s leading school finance experts calculates. Using the Perryman formula, this means that merely from reduced spending on public education, 250,000 Texans would be in the unemployment line. That’s enough to push the state’s jobless rate up to over 10 percent (it’s 8.3 percent now). And that’s without even figuring in jobs lost in higher education or health and human services.

The proposed cuts-only budget doesn’t just hurt us today, though. It also fails to create opportunity for tomorrow. When we refuse to raise the money needed for things like public education and higher education, we undermine economic growth and our future as a great state.

If the legislature takes a balanced approach, though, we can both avoid an economic disaster today and promote economic growth tomorrow. The state’s Rainy Day Fund can cover about a third of the shortfall. Some of the rest can come from new revenue, for example, increasing the cigarette tax by a buck a pack. Regardless of what politicians say, raising a little new revenue is vastly preferable to deep cuts in education or health and human services.

Of course, politicians say we have to keep taxes low to attract business. But, businesses care about more than just taxes. They need an educated workforce and a good transportation system, for example -- and Texas is proposing spending cuts so deep that the state’s ability to provide these sorts of economic building blocks would be severely compromised. Besides, Texas businesses already pay lower taxes than in almost any other state, so low that there’s ample room for increases without endangering our competitive advantage.

In the end, our elected officials will do what Texans say they want done. In the last several months, lawmakers have heard mostly from those who offer the bromide that we can balance our budget with cuts alone. But this is one bromide that will kill us. It’s time for the rest of us to make our voices heard. We need to demand a balanced approach.
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McCown is executive director of the Center for Public Policy Priorities.
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Copyright (C) 2011 by the Texas Lone Star Forum. 2/11

AMERICAN FORUM

By Frank Knapp

Whether Americans voted for Republicans or Democrats in the mid-term election, one thing is clear: Voters were demanding that Congress focus intensively on job creation on Main Street -- not lobbyists and campaign donors from big business and Wall Street.

Apparently, many in Congress and President Obama, if recent reports are true, either didn't get the message or simply don't care now that the voting is over.

The top legislative priority of the newly "Tea Party-empowered" during the lame duck session is hardly what Tea Party insurgents had in mind. The proposal is to (1) increase the national debt by borrowing $700 billion to $1 trillion over the next 10 years; (2) spend the money on big, non-job producing tax cuts for the wealthiest 2 percent of Americans; (3) use small business as the excuse.

This bad-business proposal is now being pushed in Congress and the media by those advocating extending the Bush-era tax cuts to the top two income brackets. While proponents acknowledge that less than 3 percent of the taxpayers who would receive the tax cuts actually have some business income, they insist that these approximately 900,000 taxpayers are the very successful small business owners who will stop hiring and purchasing if they don't get their tax cut. Wrong, wrong, wrong.

First, almost all real small business owners are middle-class Americans with middle-class incomes. Walk down any Main Street and you won't find small business owners netting over $250,000 a year in profit (dollars remaining after the cost of employee wages and other business expenses are deducted from taxable income).

These middle-income, Main Street small businesses are the ones we really need to help create the new jobs to lift us out of this down economy. There is absolutely no evidence that the wealthiest small business owners create more jobs than those in any other tax brackets. As any small business owner knows, the number of employees does not correlate with profit.

So who are these mysterious high-income "small business" taxpayers in the top two brackets who Congress is considering borrowing hundreds of billions from foreign countries in order to give a tax cut?

Very few of them are what most would consider small business owners. They include partners in large corporate law firms, hedge fund managers, K Street lobbyists, high-powered consultants, Wall Street bond traders and the country's wealthiest
millionaires -- all of whom claim some business income and thus are counted in IRS eyes as small businesses. These aren't "mom and pop" businesses, says Adam Looney, senior fellow at the Brookings Institution.

Not only are the vast majority of these 900,000 "faux" small business taxpayers not involved in job hiring decisions, the tax cut won't even cause them to significantly increase their personal spending to create the demand for new jobs.

The non-partisan Congressional Budget Office (CBO) evaluated 11 policy options in terms of boosting economic growth and creating jobs. It found that "policies that would temporarily increase the after-tax income of people with relatively high income...would have smaller effects because such tax cuts would probably not affect the recipients' spending significantly."

The wealthiest Americans are more likely to save their money from a tax cut rather than spend it, according to Moody's Analytics, Inc.

If we really want to give a tax cut that will create jobs, then we could cut employer payroll taxes on businesses that actually increase their workforce. The CBO estimates this would have six to eight times as much job-creating impact as an income tax cut. The policy the CBO found with the biggest bang for the buck is extending unemployment insurance. It would boost demand by providing income to people most needing to spend it in the local economy.

Alternatively we could create more customers for our small businesses through infrastructure projects, many of them long overdue upkeep or modernization, or keeping teachers and law enforcement officers working rather than laid off. The policy the CBO found with the biggest bang for the buck is extending unemployment insurance -- a direct infusion of money into local economies by people buying for their basic needs.

Increasing the nation's deficit while not saving or creating jobs is just more politics as usual in Washington where those with the most money get rewarded with even more money.

Congress needs to hear this loud and clear. These high-end tax cuts serve K Street lobbyists not Main Street shop owners. Politicians should not use us to justify a very bad business decision.

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Knapp is President and CEO of the South Carolina Small Business Chamber of Commerce.
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Copyright (C) 2010 by American Forum. 11/2010

COLORADO EDITORIAL FORUM

By Matt Sundeen

• Both states limit residential property taxes. Over time, that's reduced local revenues and shifted much of the public education costs to the states' budgets.

• Voters in both states passed constitutional budget formulas that guaranteed ever-increasing amounts for K-12 education. That means K-12 funding must grow even when state revenues drop.

• Both states are experiencing fiscal pressure from other programs that can't be cut, notably corrections and federally mandated Medicaid. Roughly 73 percent of their general fund budgets are consumed by K-12 education, Medicaid and corrections.

• Although we don't have a supermajority requirement, Colorado's voter-approval requirement in TABOR has a similar effect -- revenue increases to pay for our growing costs aren't impossible, but they are highly improbable.