Tag Archives: government shutdown

Congress Adds Insult To Injury! Pay Freeze Continues As Sequester Sets In

  By Matt Murray | March 21, 2013 - 5:00 pm | , ,
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Smashed Piggy Bank Retirement

Smashed Piggy Bank RetirementLet me start by saying the last thing I want to see is a full government shutdown.  However once again Congress as a whole takes more from the piggy bank they call federal workers’ pay.

“Congress on Thursday agreed on a measure to keep the government running through the end of the fiscal year. The bill, which also extends the pay freeze on federal employees, now heads to President Obama.”  (GovExec.com)

What is becoming a normal situation for Congress, they are continuing to take more from the federal workers.  The first pay raise they would have seen in three years was killed by Congress.  This is on top of the fact that almost every government employee is facing a mandatory furlough of 11-22 days.

Furloughs are not vacation days as some people are saying.  These are days when workers are forced off from work and are not paid.  For those people who are being forced to take a 22 day furlough, that is a 12% reduction in pay, or in more simple terms, a loss of one month of pay (over the next six months).

This continuing resolution does absolutely nothing to stop the sequester cuts.

“I remain deeply dissatisfied that sequestration is not addressed and will slash the very priorities I believe all of us came here to fulfill,” said House Appropriations Committee Ranking Member Nita Lowey, D-N.Y. (GovExec.com)

As I said before, a full government shutdown is the worst possible thing for federal employees and the entire United States.  The fact that we almost shut down in 2011, cost us in our national credit rating.

The sequester cuts have already started to have an impact on business.  According to the Huffington Post and the AP, workers are being laid off already.

  • On Monday, 250 workers at the Hanford Nuclear Reservation in Washington state received pink slips, while another 2,500 others found out they’re facing furloughs. Approximately 9,000 people work at the nation’s most contaminated nuclear site, and the Associated Press reports that “cleanup is likely to be slowed” because of the budget cuts.
  • Continental Maritime, a contractor that repairs U.S. Navy ships, expects to lay off 185 employees, effective April 12. Other contractors have issued conditional layoff notices — meaning that jobs are safe if Congress restores some funding to the Defense Department — to thousands of employees.
  • Four-hundred eighteen contract workers tied to the Tobyhanna Army Depot in Pennsylvania are losing their jobs due to sequestration. Two-hundred sixteen people will be dismissed on April 15 and 107 on April 30, the Morning Call of Allentown, Pa., reports. The paper noted that the Tobyhanna Army Depot is losing 35 percent — $309 million — of its government funding through the end of the fiscal year, and that more than 5,100 of the people who work there are being forced to take 22 furlough days.
  • At least eight municipal employees in Monterey County, Calif., are losing their jobs as a result of a decrease in the number of military contracts.
  • In early March, 23 people who work with the parks and recreation and maintenance departments in Tooele County, Utah, were laid off in order to grapple with the federal budget cuts. “I have four kids. This is my livelihood,” said Scott Chance, a 12-year employee. “It pays my health insurance. It gives me my house.”
  • Engineering Services Network is an engineering and technology company and one of the top Latino-owned companies in Virginia. President and CEO Raymond Lopez Jr. told NBC Latino that he has “lost about 20 employees through sequestration.”
  • The Red River Army Depot in Texarkana, Texas, announced in February that it was cutting 414 jobs – about 10 percent of its workforce. “I don’t know how we’re going to make it,” Raymond Wyrick, whose last day was scheduled to be March 9, told CNN Money.

Someone please tell me: how is preserving these sequester cuts in the continuing resolution going to help our economy?  How is cutting services, cutting personnel, and cutting families’ income helping our economy? Federal workers are already at the mercy of Congress. On top of sequestration, this continuing resolution that keeps the 0.5% raise off the table is just another slap in the face to federal workers.

Federal workers are not a piggy bank that Congress can turn to, every time it wants help balancing the federal budget.

There are other options.  Ending special corporate tax breaks would pay for the sequester cuts twice over.   Ending tax breaks on unearned income would pay for the sequester cuts — plus everything the House GOP wants to cut from next year’s federal budget.

Hungry like a (baby) wolfRemember, too, that maintaining the sequester cuts means that 600,000 young children from low-income families are losing the free food they had been receiving through a U.S. government nutrition program.

Smack down federal employees (again) and take food away from hungry children.  Is this the best six-month budget that our Congress can come up with?   

Another stalemate?
Or a chance to save the economy?

  By Liz Iacobucci | February 22, 2013 - 7:20 am | ,
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Top400 AGI

The days are ticking by, as our federal government heads toward sequestration (March 1st) and a possible shutdown (March 27th).

House Republicans have drawn the same line in the sand that they drew – and tried to maintain – at the end of last year. They have pledged allegiance to Grover Norquist: “No new taxes.” They would rather cut food stamps than cut military spending – but they would also rather cut the military than increase taxes. Read today’s NY Times story here.

Now’s a good time to step away from the right-wing rhetoric and take a closer look at some actual facts.

Each year since 1992, the IRS has published “information from the Top 400 individual tax returns.” The latest “Top 400” publication covers the years 1992 through 2009. (Remember 2009? According to economists, the 2007 recession ended in June 2009. Even though most of us are still dealing with the effects of that “longest and most painful downturn since the Great Depression.”)

Top400 AGIThe “Top 400” statistics clearly show what’s happening at the top of the economic scale. And despite the recession, and after accounting for inflation, those at the top are doing just fine: in 2009, the top 400 had income almost three times higher than in 1992.

(Yes, in 2009, the Top 400 taxpayers had an average income of more than $123 million. Wouldn’t it be nice if everyone’s income was three times higher than it was in 1992?)

Top400 Tax RateThe US has traditionally had a “progressive” income tax structure: those with more income pay taxes at a higher rate. But that’s not what has been happening.

(In 1992, the Top 400 paid taxes at an average rate of 26.4%. By 2009, the Top 400 average tax rate was only 19.9%. What happened over those 17 years? More money, lower tax rate for the Top 400. While the country’s economy came to a screeching halt.)

Top400 Dividend IncomeOne of the most revealing statistics from that IRS report is the amount of income the Top 400 takes as dividends rather than salaries. Since 1992, even accounting for inflation, the amount of dividend income has increased by 600%. In 2009, as the recession was bottoming out, the Top 400 took home an average of $16 million each in dividend income.

What’s the big deal about that? Unfortunately, the IRS doesn’t release statistics about how much dividend income the Top 400 receive from the same companies they control. But…

Remember what Mitt Romney taught us about America’s economy? How – rather than reinvesting corporate profits in new hires or capital improvements – many executives and investors have been wringing dividends out of their companies? (And often, like Sheldon Adelson, spending money on political influence?)

Remember that FedEx paid an estimated $8.5 million in dividends to CEO Fred Smith last year? Wonder how else that $$ could have been spent? (Read “FedEx and the Real Reason Why There’s No Jobs” in Forbes here.)

Yes, the fiscal cliff negotiations increased the tax rate on dividends from 15% to 20% – but that’s still significantly less than the tax rate on salaries. Which means CEOs are still going to prefer taking home compensation through dividends, rather than salaries.

But each dollar paid to the CEO in dividends costs the company (and the economy) a whole lot of money that could have been reinvested. Going back to Fred Smith as an example, his 15 million shares in the company represent only a fraction of the outstanding stock. For Mr. Smith to receive $8.5 million in dividends, personally, the company has to pay out well over $100 million in total dividends – money that could have been invested in new hires, or new planes, or new facilities (or improved employee benefits).

The low tax rate for dividends is a perverse economic incentive. It discourages hiring. It discourages reinvestment and long-term corporate planning. It discourages growth. It encourages concentration of wealth at the top of the economic scale.

Someone once said “don’t ever let a good crisis go to waste.”

As we head toward (and through) sequestration and shutdown threats, maybe we can hope. Maybe these latest Congress-created crises can have a happy ending.

Maybe whatever political “compromise” is eventually reached will include more changes in dividend taxation.

Maybe the country can end this vicious cycle of wringing profits out of the economy. Maybe the country can go back to growing our entire economy, not just the personal incomes of the top 400.

It’s going to be an interesting couple of months. Fasten your seatbelts for another bumpy ride.

GOP House members still in a “fighting” mood?
Could be very costly.

  By Liz Iacobucci | February 6, 2013 - 6:00 am | ,
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Last person leaving, please dock the doors

Last person leaving, please dock the doors
Hoping for bipartisan cooperation, now that the election is over?  Think again.

The weekend before the inauguration, Republicans gathered in Williamsburg to discuss strategies for “fighting” the President.  Just a week later, former Vice Presidential candidate Paul Ryan was telling a gathering of conservatives that “Republicans control both the House and most of the statehouses.  So we have to oppose the president and the Senate on some fronts—and engage them on others…”

Does that sound like cooperation to you?

Looks like it’s going to be an interesting next few months.  Two dates to mark on your calendar:

  • On March 1st, the sequestration cuts are scheduled to go into effect.  Cutting government services through these automatic, across-the-board cuts is expected to send the economy back into recession.  One example:  according to a study commissioned by the airline industry, the FAA’s share of the sequestration cuts is about $1 billion a year.  That cut would reduce the nation’s air traffic between 5% and 10%, and the country would lose between 66,000 and 132,000 jobs related to air transportation.  The irony?  The economic losses would cause tax revenues to drop by as much as $1 billion a year.  (Hmmn… $1 billion in tax revenues lost because of a $1 billion spending cut.  Not a whole lot of deficit-reduction going on, is there?)
  • On March 27th, the “continuing resolution” that funds federal government will expire.   That means a possible “government shutdown”.  According to Politico, a majority of GOP House members “are prepared to shut down the government to make their point. House Speaker John Boehner ‘may need a shutdown just to get it out of their system,’ said a top GOP leadership adviser.”

What happens if the government shuts down?  Federal employees who are deemed “essential” are still required to go to work – they just don’t get paid until after Congress approves a bill to pay them.  The last time there was a significant government shutdown, almost a half-million federal employees were required to work without pay for three weeks.

The economic damage went far beyond the family finances of federal employees.  The crisis also caused 11 states to suspend unemployment insurance, due to lack of federal funds.  Veterans’ services were suddenly unavailable (including counseling, vocational rehabilitation, and pension and education payments).  The crisis affected the oil industry, leaving more than 10,000 barrels a day untapped while companies waited for federal reviews.  The tourism industry suffered millions of dollars in losses each day of the shutdown, because passports and visas were not processed.   The housing industry suffered when $800 million worth of mortgage loans were delayed.  The crisis halted cleanup of 609 toxic waste sites.  It left hundreds of thousands of children in limbo, waiting for foster care or adoption.

And that was only a partial government shutdown.  Most of the government still had funding, during that shutdown.  (Just imagine what may happen on March 27th!)

There’s a moral here, folks.  Government services are integral to our nation’s economy.

Is there any hope that Congress could learn that lesson, in the next month or so?  Or is the GOP going to insist on doing economic damage, “just to get it out of their system”?