Tax savings that cost more than social expenditures

From a 2013 Baltimore Sun piece, “Cut tax breaks, not food stamps”, how U.S. executives can save more in taxes in a single dinner than poor families can receive in food stamp money in a month:

Imagine that the tab for dinner and drinks for 10 executives comes to $1,600. Current tax law allows companies to deduct half of the cost of business meals — in this case, $800. With a corporate tax rate of 35 percent, each dollar of deductions yields 35 cents of tax savings — so that $800 deduction saves $280 in taxes. This means one dinner for 10 people provides more public food assistance than the $279 an average household receives in food stamps for the whole month.

 
But somehow we can’t possibly afford such programs.

h/t Wonkblog: “The rich get government handouts just like the poor. Here are 10 of them.”

I suspect I’m going to have a lot more to say on this particular topic of tax savings that cost more than social program expenditures in future posts and episodes of the radio show. Particularly after I started reading through various Corporation for Enterprise Development (CFED) reports on tax subsidies to the wealthy, including their 2014 report “Redeploying $540 Billion in Federal Spending to Help All Americans Save, Invest, and Build Wealth” (PDF). Spoiler alert: Hundreds of billions of dollars in revenue is lost each year to Federal tax credit programs disproportionately (and needlessly) benefiting wealthy households.

NASA comes out swinging at Russia, US Congress

It appears I spoke too soon in lauding ongoing US-Russian space cooperation amidst the political crisis. The National Aeronautics and Space Administration (NASA) issued a startlingly aggressive statement tonight against both the Russian government and the American Congress (Congressional Republicans, really, though they didn’t spell it out). My emphasis added:

Statement regarding suspension of some NASA activities with Russian Government representatives.

Given Russia’s ongoing violation of Ukraine’s sovereignty and territorial integrity, NASA is suspending the majority of its ongoing engagements with the Russian Federation. NASA and Roscosmos will, however, continue to work together to maintain safe and continuous operation of the International Space Station. NASA is laser focused on a plan to return human spaceflight launches to American soil, and end our reliance on Russia to get into space. This has been a top priority of the Obama Administration’s for the past five years, and had our plan been fully funded, we would have returned American human spaceflight launches – and the jobs they support – back to the United States next year. With the reduced level of funding approved by Congress, we’re now looking at launching from U.S. soil in 2017. The choice here is between fully funding the plan to bring space launches back to America or continuing to send millions of dollars to the Russians. It’s that simple. The Obama Administration chooses to invest in America – and we are hopeful that Congress will do the same.

 
naga-logoI think it’s been a while since we heard the typically staid and politically sedate post-Cold War NASA rip this hard into anyone, let alone Russia. The phrase “continuing to send millions of dollars to the Russians” is about as undiplomatic as one can get.

I did notice that they chose to say “reliance on Russia” rather than “dependence on Russia” (which would be more accurate) and I’m sure that was a PR word choice.

Must be pretty tense right about now on the Space Station.

 
Related Reading: Watching the USSR break up, from Space

March 17, 2014 – Arsenal For Democracy 77

AFD-logo-big-new Description:
Nate and Greg join Bill to talk about the lawsuit alleging the NCAA violates anti-trust laws, Chuck Hagel’s reshaping of the U.S. defense priorities through budget changes, and the Crimean annexation referendum.

 
Part 1: Part 1: NCAA – AFD 77
Part 2: Part 2: Defense Budget – AFD 77
Part 3: Part 3: Crimea Referendum – AFD 77

To get one file for the whole episode, we recommend using one of the subscribe links at the bottom of the post.

Related Links

Deadspin: “The NCAA-Killing Lawsuit Might Finally Be Here”
Washington Post: Pentagon blueprint would cut Army size as military adjusts to leaner budgets
RT America: “Underwater drone fleet’s budget nearly doubled by the Pentagon”
AFD: Verdict on Crimea vote: Seeeeeeems legit
Moscow Times: European Investors Say Pleas Against Sanctions on Russia Ignored
AFD: What Russia missed: The rise of a united Ukraine
AFD: Russian troops land in Ukraine village, outside Crimea
AFD: Sweden after Crimea: Sure would be nice to have that empire again

Subscribe

RSS Feed: Arsenal for Democracy Feedburner
iTunes Store Link: “Arsenal for Democracy by Bill Humphrey”

House Republicans still really struggling with easy concepts

A majority of the House Republicans (169 of them) voted in favor of the Ryan-Murray budget deal in December — a deal which was not debt-neutral in the short term — but today only 28 of them voted to raise the debt limit.

I think these people must have been hit in the head too many times or something. You can’t vote through a package that increases the debt and then vote against raising the debt limit to accommodate that increase you already approved.

As a refresher, let’s check back in on part of a popular post I wrote in October, “Shutdown Myth 2: The Debt Ceiling Can Stop Spending”:

The debt ceiling is a limitation set by Congress on the executive branch’s ability to borrow money to pay for expenses Congress has already authorized. Failure to raise the debt limit does not prevent these authorized expenditures happening because the executive branch is constitutionally required to spend the money Congress has ordered to be spent.
[…]
Again, no new money is being spent when the ceiling is raised so this doesn’t somehow rein in the spending. It’s merely a cap on the ability to borrow to pay for expenditures Congress already directed the executive branch to make.

 
To recap: Six times more House Republicans voted to raise the debt itself last year than voted to raise the limit on that debt today.

Thank goodness the Democrats in the minority were allowed to vote through a debt ceiling increase in the absence of people who can add two and two.

Congress: Low bar, everybody down

Word on the street is that we’re supposed to be excited about the not-yet-passed budget deal between Democratic Sen. Patty Murray of Washington and Republican Rep. Paul Ryan (the 2012 VP nominee) of Wisconsin.

Not because it’s a good deal. It’s still bad on its internal merits, relative to the fiscal direction we need to take the government and the economy. It’s being hailed as a good deal more because:

  • it exists,
  • it’s relatively long-term (through fall 2015, not another short fix),
  • and it’s not quite as horrendous as the 2011 Budget Control Act, known commonly as “the sequester.”

The latter was a haphazard across-the-board slash-and-burn measure, rather than a thoughtful targeting that took into account economic conditions. This is a somewhat more considered set of cuts that partially considers economic conditions.

Or as the Washington Post WonkBlog put it: “The budget deal is good for the economy because it isn’t terrible“…

The budget deal that Sen. Patty Murray (D) and Rep. Paul Ryan (R) announced Tuesday night could be good news for the U.S. economy in 2014. Not for what it contains. Rather, for what it doesn’t contain — and for the fact that it exists at all.

[…]

In other words, at a time of high unemployment, falling deficits and low interest rates, budget-cutting is still making the economy worse than it otherwise would be. But with this deal, Washington policy will be less counterproductive than it otherwise would be.”

Congress really seems to be facing some “soft bigotry of low expectations” from the American public and media these days. But I’m not sure why we’re supposed to throw a parade when they fulfill their minimum required duties — such as passing budgets and funding the operations of our national government — like they’re supposed to (and kind of still do a bad job even when they do that).

I understand that it’s seen as “progress” that we’re close to getting an actual budget passed for the first time since 2010 — though let’s not count our chickens before they’re hatched — but it’s a dangerous path to travel too far down because it both emphasizes value in reaching any deal no matter how bad, and because it only encourages marginal cooperation rather than actually policy engagement by the Republicans.

We’re getting a deal that will continue to put a major drag on the economic recovery — just a little less of one — and we’re still making huge cuts in vital areas. Is it better than nothing or further artificial fiscal crises? Probably. But not by a lot.

Deficit Levels

This video was on the front page of Daily Kos mainly to highlight what the author saw as betrayal by Sen. Evan Bayh on FOX News, where he explained why he planned to vote against the Federal spending bill that runs budget programs. I’m not, however, posting it here for that reason, as you’ll read below the video.

If he and other deficit hawks stopped for a moment to consider what they are actually saying, they might realize they were making the case FOR increased deficit spending. He cites the Civil War and WWII as the only times when he thinks the deficit-to-GDP ratio was higher than now (Bayh thinks it’s 12% of GDP right now, and by the end of WWII it was over 100% of GDP).

Ok, setting the Civil War aside because that brings up unrelated issues, let’s examine the issue of citing World War II deficits. Right now, we’re in a major recession. It’s the worst since the Great Depression (1929-1942ish). Now, we trundled along from 1929 to the US entry to war worrying about deficits and not spending too much compared to the national GDP, which was much smaller then than it is now. No amount of New Deal programs worked until 1942, when the New Deal went on Allied War Effort steroids. That doesn’t mean the New Deal failed because it was useless, it means it didn’t succeed because it didn’t go far enough.

World War II came along and we went WAY into debt and spent at a federal budget deficit exceeding the entire gross domestic product of the United States. This money went to buy and build weapons, pay factory workers, expand the bureaucracy, pay soldiers, overhaul the manufacturing industry, and increase government control over the American Total War Economy. Our long malaise and stupor finally broke and we emerged out the other side of the war on an economic crest (which temporarily dampened as spending and price controls were slashed rapidly by a Republican-run Congress). But the Great Depression was finally over and we didn’t go back to it. Without the extreme wartime spending, though, it’s probably safe to say the Depression would have continued longer.

While the debt was never entirely paid off, the deficit and debt levels were both brought reasonably quickly back under control, and they largely remained that way for the rest of the 20th century. By the time President George W. Bush took office, we were still paying down the national debt, but the spending was close to par with the revenue. No harm done.

Obviously, in the very long run, World War II-level spending would be unsustainable, but it was only meant for the short-term. Evan Bayh clearly makes an exception to his deficit concerns “rule” when he cites World War II…which came after/during the Great Depression and ended it permanently. That means that he knows it’s critical to act by massive government spending for a few years. There are exceptions to his rule, and he knows it, but doesn’t connect the dots.

Aren’t we in exceptional times right now?

This post originally appeared on Starboard Broadside.