DISPATCHES

GOP MAKES POOR, MIDDLE CLASS PAY FOR CORP TAX BREAKS

State budgets across the country are in disarray as a weak economy, the end of tens of billions in Recovery Act funds, and a GOP-led House that is pushing for deep cuts to many programs that benefit state and local governments set the stage for massive in shortfalls over the next two years. Instead of making the tough choices necessary to help their states weather the current crisis with some semblance of the social safety net and basic government services intact, Republican governors are instead using it as an opportunity to advance several longtime GOP projects: union busting, draconian cuts to social programs, and massive corporate tax breaks. These misplaced priorities mean that the poor and middle class will shoulder the burden of fiscal austerity, even as the rich and corporations are asked to contribute even less. Here’s a detailed look by ThinkProgress at how the GOP’s war on the poor and middle class is playing out at the state level:

Arizona: Following months of national outcry and at least two deaths, Gov. Jan Brewer’s administration has finally relented on what many likened to real-life “death panels” that denied care to those in need of transplants in order to save the state just over a million dollars. Now, however, Governor Jan Brewer is proposing to kick some 280,000 Arizonans, mostly childless adults, off the state’s Medicaid rolls. Brewer claims such a move is the only way to get the state’s fiscal house in order, as it would save $541.5 mln in general funding spending. Brewer also wants to save $79.8 mln by dropping 5,200 “seriously mentally ill” people from the state’s Medicaid program. Instead of balancing out these draconian cuts with additional revenue increases or simply not making the cuts in the first place, Brewer instead signed $538 mln in corporate tax cuts into law in February.

Florida: In February, Gov. Rick Scott announced that he was canceling a proposed high-speed rail line between Orlando and Tampa — something that will cause Florida to forego $2 bln in federally-funded investments and cost the state at least 24,000 jobs. Scott’s move is opposed even by the Republican chairman of the US House’s Transportation and Infrastructure Committee, and Obama administration officials are seeking ways to bypass Scott to keep the project moving.

Scott’s radical budget proposal, unveiled at a tea party event, includes $4.6 bln in spending cuts that would result in the direct loss of more than 8,000 jobs. It would also privatize large areas of state services, including juvenile justice facilities, Medicaid and some hospitals. Education spending would be cut by more than $3 bln and teachers and other public employees would see their pensions under threat. Such deep cuts in essential programs and services are necessary to offset Scott’s proposal to cut corporate and property taxes by at least $4 bln.

Michigan: While newly-elected Gov. Rick Snyder has said he won’t “pick fights” with unions, his budget plan echoes the misguided priorities of other GOP governors. As Matt Yglesias has noted, Snyder has an innovative definition of “shared sacrifice.” His plan calls for “$1.2 bln in cuts to schools, universities, local governments and other areas while asking public employees for $180 mln in concessions.” In addition, it would raise taxes on individuals by ending many deductions and taxing pensions — all in order to pay for $1.8 bln in tax cuts for businesses. Since the state’s entire budget shortfall this year is only about $1.7 bln, all or most of the cuts to services and programs important to the poor and middle class (many of whom will also see their taxes increases) could be avoided if the governor was willing to forego corporate tax breaks.

New Jersey: Gov. Chris Christie has become a right-wing sensation, particularly because of his war on public employees — especially New Jersey’s teachers. He’s often lauded by the conservative punditocracy for his tough talk and for balancing the state’s budget last year without raising taxes. Unfortunately, a look behind the curtain reveals that Christie’s numbers simply don’t add up. After vetoing Democrats’ plans to raise taxes on New Jersey’s millionaires, Christie closed the state’s multi-billion dollar shortfall through a combination of measures, including simply refusing to make contributions to the state’s pension fund and steep cuts in education funding and assistance to municipalities. Democrats accused Christie of simply shifting the burden to local governments, which caused New Jersey’s already-high property tax rates to double even as the state was slashing funding to its property tax rebate program. (Former Minnesota Gov. Tim Pawlenty used a similar gimmick during his final year in office.) Christie is also being sued by Federal Transit Administration for keeping $271 mln in federal funding for a tunnel under the Hudson — money he insists on keeping even after having personally canceled the project.

New Jersey is staring down another large deficit and Christie’s budget, expected to be released today, will pair continuing austerity for education and local governments with further cuts to the state’s Medicaid program. The austerity measures and cuts to programs for the poor will have to be all the deeper this year as Christie is also insisting on cutting corporate tax rates.

Ohio: Gov. John Kasich demonstrated an early propensity for making future-losing choices when he made good on a campaign promise to kill Ohio’s federally-funded high-speed rail project — a move that will cost Ohio $400 mln in badly-needed infrastructure investment, cost thousands of jobs, and derail millions of dollars in related private sector investments in economic development. Kasich, along with numerous other Ohio Republicans, has signed the Americans for Tax Reform pledge that rules out any tax increases to help the state make ends meet. Even though the state has an $8 bln budget shortfall, Kasich has gone even further in proposing a variety of tax cuts that would benefit corporations and the wealthy. In addition to going after public employees (who Kasich thinks should not ever have the right to strike) and essential government programs, he has proposed a variety dubious privatization schemes to finance such massive tax breaks.

Kasich has voiced support for radical Wisconsin Gov. Scott Walker’s assault on the middle class and workers. The Ohio Senate was to take up SB5, its version of anti-union legislation (2/22); at least 8 Republican Ohio state senators have already come out in opposition to the current proposal. The current proposal goes even further than the Walker plan in eliminating collective bargaining rights for Ohio’s public employees.

Texas: Gov. Perry spent the last two years traveling around the country attacking the stimulus and other Obama administration initiatives, all while touting the “Texas Miracle” (low taxes, low services and low regulations). However, as Matt Yglesias noted, “It looks like the secret behind Texas’ ability to avoid the kind of budget woes that afflicted so many states last year was two-year budgeting rather than the miracle of low-tax, low-service, lax-regulation policies.” Moreover, Perry relied more on the stimulus than any other state to fill his 2010 budget gap, with stimulus funds plugging a full 97% of the gap.

In facing down a $25 bln budget crisis on par with that of California, Perry categorically rejected any tax increases. Texas, as Paul Krugman said, already takes a “hard, you might say brutal, line toward its most vulnerable citizens,” as indicated by its poor educational performance and sky-high 25% child poverty rate. Still, Perry also refuses to use any of the $9.4 bln in the state’s rainy day fund (some of which, ironically, comes from stimulus funds intended to help states stave off draconian cuts that Perry instead squirreled away) and is instead contemplating deep cuts to child services programs and education, among other things. Perry even floated a plan to drop Medicaid entirely. Perry’s proposed education cuts are so deep that they prompted an unlikely source to take to the pages of the Houston Chronicle to write in opposition to them — none other than former First Lady Laura Bush. Bond ratings agency Standard & Poors has also weighed in, saying Texas’ cuts-only approach “won’t solve the state’s long-term fiscal problems” and that revenue increases need to be considered alongside the deep cuts being proposed.

Wisconsin: Gov. Scott Walker first gained national headlines for joining Ohio’s Kasich in a future-losing decision to cancel an $800 mln investment — fully paid for the by the federal government — in high-speed rail. This decision prompted train manufacturer Talgo to announce it was leaving the state and will likely cost the state thousands of jobs.

Walker is of course now famous for his high-stakes war against Wisconsin’s workers. Walker has used a very small short-term shortfall and larger shortfall to come (which is still smaller than shortfalls the state has faced in recent years) to move forward with an unpopular plan to destroy the state’s public employee unions. As Ezra Klein and many others have noted, Wisconsin’s unions aren’t to blame for the state’s budget problems and taking away their collective bargaining rights will have no impact on the state’s fiscal situation. Indeed, the unions offered to concede to all of Walker’s financial demands, so long as they could retain their collective bargaining rights. Walker balked at this offer, betraying his true motive: busting unions. Walker is also late in offering his budget, but it is believed that in spite of the supposed “crisis” and being “broke,” as Walker himself has said, his budget plans will include “a LOT more tax breaks” for the rich and corporations that will have to be balanced on the backs of workers or with painful cuts to state services and the state’s Medicaid programs, BadgerCare. It’s also worth noting that the last time Scott Walker went union busting, it turned into a massive boondoggle when he was overruled by an arbiter, wasting hundreds of thousands of taxpayers dollars in the process.

When Republican governors speak of “shared sacrifice,” it seems that the only thing they mean is sacrifices by the poor and middle class in order to fund massive tax breaks for the rich and corporations. (ThinkProgress.org)

THE UGLY TRUTH: As the Washington Post’s Ezra Klein notes, what Wisconsin Gov. Walker is doing is not attacking the budget but "attacking the right to bargain collectively — which is to say, he’s attacking the very foundation of labor unions, and of worker power — and using an economic crisis unions didn't cause, and a budget reversal that Walker himself helped create, to justify it.” By doing so, the Republican governor will strike a severe blow at long-standing allies of his political opposition. Unions have typically been “an important part of the core Democratic coalition” and Walker is creating an opportunity to land a blow at his opposition by attacking the political participation on behalf of those who support workers’ rights. Any question of whether Walker's attack on unions is politically motivated can be answered by the fact that he exempted the police and firefighter unions from this power grab — two groups that supported his candidacy. Certainly, Walker's anti-union policies didn't arise in a vacuum but were orchestrated and buttressed by notorious right-wing political players including Koch Industries and the Lynde and Harry Bradley Foundation — “a $460 mln conservative honey pot dedicated to crushing the labor movement.” Indeed, the Bradley Foundation's CEO, former state GOP chairman Michele Grebe, headed Walker's campaign and transition. What's more, media and astroturf organizations ginning up support for Walker's power grab include the MacIver Institute (which produced a series of videos attacking anti-Walker protesters) the Wisconsin Policy Research Institute (which funded polls, policy pieces, and attack videos against Walker’s opposition) and Americans for Prosperity (which not only helped elect Walker but bused in Tea Party supporters to hold a pro-Walker demonstration Saturday, Feb. 19). All of these groups receive funding from the Bradley Foundation. As the New York Times’ Paul Krugman notes, “billionaires can field armies of lobbyists; they can finance think tanks that put the desired spin on policy issues; [and] they can funnel cash to politicians with sympathetic views.” Given this political reality, unions “are among the most important” of the institutions “that can act as counterweights to the power of big money.” Nancy MacLean, a labor historian at Duke University, said “eliminating unions would do to the Democratic Party what getting rid of socially conservative churches would do to Republicans.” “It's a stunning partisan calculation on the governor's part,” she said, “and really ugly.”

WISCONSIN GOP MULLS SALE OF STATE POWER PLANTS. Union busting is far from the only feature of Wisconsin Gov. Scott Walker’s controversial emergency budget bill. Ed at GinAndTacos.com notes (2/21) that farther down in the 144-page bill is Section 16.896, which authorizes the sale “with or without bids” of “any state-owned heating, cooling, and power plant” or the state “may contract with a private entity for the operation of any such plant, with or without solicitation of bids, for any amount that the department determines to be in the best interest of the state.” And no approval or certification of the public service commission is necessary for a public utility to purchase, or contract for the operation of, such a plant.

“If this isn't the best summary of the goals of modern conservatism, I don't know what is,” wrote pseudonymous Ed. “It's like a highlight reel of all of the high-flying slam dunks of neo-Gilded Age corporatism: privatization, no-bid contracts, deregulation, and naked cronyism. Extra bonus points for the explicit effort to legally redefine the term ‘public interest’ as ‘whatever the energy industry lobbyists we appoint to these unelected bureaucratic positions say it is.’”

D.C. PUNDITS FORGET ABOUT JOBS. Steve Benen noted at WashingtonMonthly.com (2/21) that during the hour-long episode of NBC’s Meet the Press (2/20), “there was exactly one reference to the US unemployment rate, uttered by former Michigan Gov. Jennifer Granholm (D). The word ‘spending’ was used 40 times. The very first sentence of the broadcast was host David Gregory telling viewers, ‘The battle to rein in government is shaping up to be the major fight not only of this year, but of the 2012 campaign.’”

Benen noted that the previous week, House Speaker John Boehner (R-Ohio) twice acknowledged publicly that his proposed spending cuts would force more American workers from their jobs, on purpose. The first time he said it, Boehner told reporters, “So be it.”

“How many times did this rather startling remark come up in any of the five major Sunday morning public affairs shows? Zero. It was simply ignored,” Benen noted.

“And the reason it was ignored isn't hard to understand: pesky Americans may think jobs and the economy are the most pressing national issue, but the political world has no use for such parochial concerns. The establishment has moved on.

“This reached a farcical level on Meet the Press when Republican strategist Ed Gillespie insisted that President Obama is ‘out of touch.’ Why? Because the president is committed to creating jobs, promoting innovation, and cultivating economic development through high-speed rail.

“To be ‘in touch,’ apparently, is to consider such priorities unimportant.”

DAM SHAME. Of the nation’s 85,000 dams, more than 4,400 are considered susceptible to failure, according to the Association of State Dam Safety Officials, as reported in the New York Times (2/22). “But repairing all those dams would cost billions of dollars, and it is far from clear who would provide all the money in a recessionary era,” Henry Fountain reported.

Nationwide, the potential repair costs are staggering. A 2009 report by the state dam safety officials’ group put the cost of fixing the most critical dams — where failure could cause loss of life — at $16 billion over 12 years, with the total cost of rehabilitating all dams at $51 billion. But those figures do not include Lake Isabella, Calif., and other dams among the approximately 3,000 that are owned by the federal government. The corps, for example, says that more than 300 of the roughly 700 dams it is responsible for need safety-related repairs, and estimates the total fix-up bill at about $20 billion.

The corps has already spent about $24 million just to determine the scope of the problems at Lake Isabella, Calif., where a 57-year-old dam is in danger of eroding internally; water could flow over its top in the most extreme flood season; and a fault underneath it could produce a strong earthquake; any of which could lead to a catastrophe that would inundate not only Lake Isabella, population 4,000, but also Bakersfield, population 340,000.

Barbara Morrill noted at DailyKos (2/21), “Sounds like a pretty big problem, but fixing them might mean a lot of union jobs, so ...”

FISCAL COMPROMISE ELUSIVE. Erskine Bowles and Alan Simpson wrote in the Washington Post (2/20), “In the days since President Obama's budget was released, the general perception has been that the president rejected the recommendations of his fiscal commission, which we co-chaired, and that the opportunity for serious action on the deficit has been lost.” They proceed to advise, “Building trust and mutual respect is critical to reaching a principled compromise on real fiscal reform. To accomplish something significant, a process has to be formed that puts the right people in the room -- leaders who are willing to work together constructively and who are empowered to represent the administration and both parties in Congress. That cannot happen if all involved are not confident that others are negotiating in good faith.”

But as David Waldman noted at DailyKos.com (2/21), in fact the fiscal commission did not come up with any recommendations. “The rules were that your final report would contain your recommendations, and that you needed 14 votes to issue a final report. You didn't get them, so you lost.”

So, the editorial opinion of the Washington Post notwithstanding, Bowles and Simpson are not authorities in how to get “a principled compromise on real fiscal reform.”

WHITE HOUSE: SOCIAL SECURITY ISN’T THE PROBLEM. In an op-ed column taking issue with USAToday’s editorial position, conforming with D.C. conventional wisdom, that immediate action is needed to fix Social Security, Office of Management and Budget Director Jacob Lew noted, “The budget put forward by President Obama last week is a blueprint for how we can live within our means and win the future. As this begins the budgeting process in Washington, we need to be clear about the causes of the pressing fiscal problems we face. Specifically, looking to the next two decades, Social Security does not cause our deficits ...”

Social Security began collecting less in taxes than it paid in benefits in 2010, but the trust fund will continue to accrue interest and grow until 2025, and will have adequate resources to pay full benefits at least until 2036, he noted. “For years, the surpluses in the Social Security trust fund have helped to mask our deficits elsewhere. Now that we are paying Social Security back, the problem is not with Social Security, but with the rest of the budget. In 2001 and 2003, Washington cut taxes for the wealthiest Americans and later expanded Medicare without paying for it. Blaming Social Security for our fiscal woes is like blaming you for not saving enough in your checking account because the bank lost all depositors' money.

“The problem is not Social Security; the problem is the mismatch between outlays and revenues in the rest of the budget. Closing that gap and paying down our debt will take tough choices, and the president's budget makes them. Strengthening Social Security is an important, but parallel, issue that needs to be addressed as quickly as possible. But let's not confuse it as either the cause of or a solution to our short-term fiscal problems.”

GIVING AWAY FED MONEY ACCIDENTALLY ON PURPOSE. When the price of oil goes above a certain benchmark level, companies drilling on US territory in the Gulf of Mexico are supposed to pay royalties to the US government. Unfortunately, a bureaucratic snafu gave away leases for free to 24 companies a few years ago, and ever since the US Treasury has been receiving no royalties on those wells. As of 2008, according to Economist.com, the bill came to $1.3 bln; this year, the losses will be $1.5 bln. Over the decades-long lifetime of the wells it'll add up to a lot more. According to the Government Accountability Office it'll come to $53 bln over the next 25 years. In February, Rep. Ed Markey (D-Mass.) and a few other Dems on the House Natural Resources Committee offered an amendment to the Republican budget bill to make those oil producers pay the standard amount in the future on the royalty-free leases they mistakenly received due to bureaucratic error. The amendment was voted down, 251-174.

BOEHNER DENIES SHUTDOWN TALK. As the March 4 deadline approaches for passing a continuing resolution to fund the government through Sept 30, House Speaker John Boehner (R-OH) told Sean Hannity at Fox News (2/18) there has been no talk from Republicans about shutting the government. “The only people cheering for government shutdown around here are Democrats, led by Harry Reid and Chuck Schumer. There’s been no talk about shutting the government down on our side. Our goal here is to reduce spending. It isn’t to shutdown the government,” Boehner said, but Ben Armbruster noted at ThinkProgress that Boehner ignored repeated threats by Republicans to shut down the government:

• Rep. Steve Womack (R-AR): “Womack said he would be open to forcing a government shutdown over spending.” [The Hill, 12/12/10]

• Rep. Lynn Westmoreland (R-GA): “If government shuts down, we want you with us. … It’s going to take some pain for us to do the things that we need to do to right the ship.” [9/10/10]

• Rep. Tom Price (R-GA): Q: do you think shutdown should be off the table? PRICE: Everything ought to be on the table. [2/11/11]

• Rep. Steve King (R-IA): “[King] said last week that he wants Boehner and other House leaders to sign a ‘blood oath’ that they will include a repeal of health care reform in every appropriations bill next year, even if President Barack Obama vetoes the bills and a government shutdown occurs.” [Roll Call 9/10/10]

• Rep. Tim Walberg (R-MI): If Obama…responds to the mandate from voters and understands he can’t disregard it, then he thinks Obama will do well “If he doesn’t, he will shut government down,” Walberg said. [Jackson Citizen Patriot, 11/03/10]

• Rep. Alan Nunnelee (R-MI): Q: Are you willing to participate in what would lead to a shutdown of the federal government to stop this monstrosity from going down he tracks? NUNNELEE: I agree with Congressman Boehner. We need to do whatever is necessary to make sure this bill never goes into effect. [11/09/10]

• Rep. Louie Gohmert (R-TX): “If it takes a shutdown of government to stop the runaway spending, we owe that to our children and our grandchildren.” [11/15/10]

• Rep. Ron Paul (R-TX): “This is the way the government should adjust. If they can’t pay their bills, wait.” [12/16/10]

• Rep. Joe Walsh (R-IL): “We will do what we have to do, to shut down the government if we have to, to choke Obamacare if we have to.” [2/12/11]

As for the Democrats, Senate Majority Leader Harry Reid (D-NV) called on Boehner to take government shutdown off the table. “Speaker Boehner said his goal is to not shut down the government,” Reid said (2/20). “If he is serious about that, he should completely take a shutdown off the table and tell other Republicans to stop with the threats.”

ARIZONA CORPORATIONS GET TAX BREAK WHILE TRANSPLANT WAITING LIST GROWS. Since Arizona Gov. Jan Brewer (R) Brewer enacted painful cuts to the state’s Medicaid program in October, two Arizonans unable to pay for the transplants they needed passed away. After months of appeals and protests, it appears Brewer has finally agreed to set aside a $151 mln “uncompensated-care pool” to pay health-care providers for “life-saving” procedures, including transplants.

However, Tanya Somanander noted at ThinkProgress.org (2/21), state House Republicans remain vigilant in their anti-human life campaign. They are refusing to let measures to restore funding for organ transplants advance because, as the state House Appropriations Committee Chairman Jon Kavanagh (R) explained, “not enough lives would be saved to warrant restoring millions in budget cuts” for the transplants.

But as Brewer and the GOP-led legislature waffle over the value of human lives, two more people — including 23-year-old leukemia patient Courtney Parham — join the 98 others standing before the Brewer death panel. Because the state has so far refused to pay for her transplant, Courtney’s family “must raise somewhere between $400-$800 thousand dollars for a transplant, or their daughter will die,” KGUN 9 in Tucson reported.

While Courtney’s life is on the line, Brewer signed tax cuts for businesses into law in February that will cost Arizona $538 mln by 2018. Yet the governor has dragged her feet in offering the mere $1.36 mln needed to save the lives of uninsured Arizonans, and she has consistently ignored 26 possible funding solutions from a member of her own party, Somanander noted.

“For Brewer, the fact that Courtney’s plight is forced to take a backseat to business tax cuts is ‘sad but necessary,’” Somanander wrote.

EGYPTIAN UNION LEADER BACKS WISCONSIN PROTESTERS. One of the most underreported stories about the pro-democracy movement in Egypt was the role of labor unions in the demonstrations, many of which were protesting against neoliberal right-wing economic policies just as much as they were protesting against the Mubarak dictatorship, Zaid Jilani noted at ThinkProgress.org (2/21). During the uprising in that country, AFL-CIO president Richard Trumka praised the role of organized labor, saying, “The people’s movement for democracy in Egypt and the role unions are playing for freedom and worker rights inspires us and will not be forgotten.”

As tens of thousands of union members and other Wisconsin residents were taking to the streets to protest against Gov. Scott Walker’s (R) attempt to abolish collective bargaining rights for most public workers, a leader of Egypt’s largest umbrella group of independent labor unions praised the Wisconsin movement. In a videotaped statement, Kamal Abbas, the General Coordinator of the Centre for Trade Unions and Workers Services, told the Wisconsin protesters, “We stand with you as you stood with us.” He said “no one believed” that the revolution against the Mubarak regime would succeed, yet they were able to bring the dictator down within 18 days. He encouraged demonstrators to stay strong, saying, “Don’t give up on your rights. Victory always belongs to the people who stand firm and demand their just rights.”

From The Progressive Populist, March 15, 2011