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NH Senate Republicans Cut Business Taxes At The Expense of Working Families

Image by Marc Nozell (CC Flickr)

NH Senate Chamber Image by Marc Nozell (CC Flickr)

Republicans on the Senate Finance Committee voted today to give big businesses more tax giveaways while making small businesses and middle class families pay the price.

“Our budget is a statement of priorities and with the actions taken by the Senate Finance Committee over the last week have clearly demonstrated they side with large corporations rather than the working people of New Hampshire,” said Senator Woodburn. “The cost of these tax giveaways is clear and the price is dear. Rather than fund Medicaid Expansion, which is helping tens of thousands of Granite Staters and strengthening our economy, Senate Republicans have decided to give tax cuts to large, out-of-state corporations instead.”

The Senate voted to approve an amendment that reduced the Business Profits Tax by 0.2% and the Business Enterprise Tax by 0.025% in Fiscal Year 2017. Based on the fiscal notes in SB 1 and SB 2, the original vehicles for the tax giveaways, these tax cuts would reduce state revenues by $15.6 million in Fiscal Year 2017. Senate Democrats have fought to include the extension of Medicaid Expansion in the budget, which would cost about $12 million in Fiscal Year 2017, far less than the cost of the business tax cuts.

“New Hampshire’s business community has called on us to continue the state’s successful expansion program because it’s reducing heath care cost-shifting onto our families and businesses, strengthening the health of our workforce, and boosting our economy,” said Sen. Lou D’Allesandro, ranking Democratic member of the Senate Finance Committee. “Our businesses need healthy workers and reductions in energy rates before they need a 30th tax reduction in 8 years. New Hampshire is a great place to do business now and these tax cuts do nothing to address the real problems facing our growing economy.”

Senate Republicans’ big business tax giveaways would cost $15 million in the next biennium, which is more than the cost of continuing the state’s successful Medicaid expansion program for 40,000 Granite Staters.

“We’ve heard throughout the budget process that New Hampshire needs to ‘live within its means.’ If we cut business taxes today only to put off their full consequences for later years, this action violates that notion entirely,” said  New Hampshire Fiscal Policy Institute (NHFPI) Executive Director Jeff McLynch.

“The Finance Committee has approved a cut of $14 million from the FY 2017 budget while the state struggles to find necessary funding for higher education, health care, and other services to support vital human needs,” said McLynch.

“These proposed reductions in business tax rates will reduce revenue by more than $80 million per biennium when fully phased in, with no plan to replace the lost revenue,” said McLynch.

“Phasing business tax reductions in overtime simply puts off – for another day and onto future legislatures — the difficult choices and tough tradeoffs that would have to be made to accommodate the revenue losses certain to result from business tax cuts,” said McLynch.

Not to mention that Senate Republicans have also proposed cutting more than $3 million from the Governor’s proposal for substance misuse treatment and defunding the state’s landmark mental health settlement.

“Senate Republicans are putting their majority at risk as they vote for more big business tax giveaways while cutting critical economic priorities and threatening health coverage for 40,000 Granite Staters,” said New Hampshire Democratic Party Chair Ray Buckley. “From cutting funding for substance misuse treatment to refusing to continue New Hampshire’s successful Medicaid expansion program, Senate Republicans’ budget proposal would hurt the health and economic wellbeing of our communities and undermine the state’s ability to lay the foundation of a new generation of economic growth.”

NH Senate Republicans Vote For Tax Giveaways And Force Massive Cuts To The State Budget

Today the Senate voted to pass Senate Bill 1, reducing the rate of the business profits tax, and Senate Bill 2, reducing the rate of the business enterprise tax. The Republican-led Senate voted to pass SB 1 & SB 2 on a party line vote of 14-10.

“Because they are unwilling to consider reasonable revenue changes – including a modest increase in the tobacco tax – the New Hampshire House of Representatives is currently decimating critical economic priorities for our state, including cutting the Department of Transportation in half, taking away health coverage from tens of thousands of people, cutting services like meals on wheels for seniors, cutting funding for higher education, and even cutting travel and tourism promotion in half,” stated Governor Maggie Hassan. “These two bills would create even deeper holes in this and future budgets, negatively impacting our ability to invest in the shared priorities that are critical to the success of our people, businesses and economy. Further eroding the revenue sources that do exist is irresponsible and will lead to further reductions.”

“While we must maintain our low-tax environment, which the Tax Foundation ranked as the seventh-best in its business tax climate index, we must also continue investing in priorities such as a strong and healthy workforce pipeline, a modern transportation infrastructure, and safe communities that businesses tell me are critical to their ability to grow, thrive and create jobs. As we face ever-tightening budgets, we must examine the fiscal impact of these tax breaks with the same scrutiny as any new spending, and supporters of these bills must address how the lost revenue would be offset,” concluded Hassan.

These tax giveaways are not going to do anything to help fix any of the dozens of problems currently facing our state.  The Republican’s in the legislature are refusing to do anything but force more cuts to programs like Meals on Wheels and substance abuse treatment.  These tax breaks will not help fix the hundreds of failing roads and bridges that are literally crumbling beneath us.

“With the House making draconian cuts to budget, we are seeing massive cuts to the department of transportation, mental health services, development disabilities waitlist, substance abuse treatment, university system, social services for the elderly, travel and tourism, and the Veterans Home,” said Senate Democratic Leader Jeff Woodburn. “The cost of these tax giveaways is clear and the price is dear. The House Republican majority seems to have answered the question of who’s going to pay. Senate Republicans who support these fiscally irresponsible tax cuts should tell the public what additional cuts they plan to make.”

“Businesses need a modern and safe infrastructure, high-quality schools, and healthy, safe, and livable communities,” said Senator Woodburn. “These tax giveaways will hurt New Hampshire’s ability to provide these critical economic priorities. We should be investing in these priorities not add more devastating cuts on top of what the House cuts.”

An in-depth look at the GOP Budget will show that they care less about the people of New Hampshire and more about giving away tax breaks to large corporations.

“Just this week we’ve seen how far the House has gone in its one-sided efforts to balance the budget, making drastic cuts to transportation, health care, and services for the elderly, the homeless, and Granite Staters with developmental disabilities. Layering in another $15 million in cuts will endanger state government’s ability to serve the people of New Hampshire and its ability to compete with other states to attract our future workforce,” said New Hampshire Fiscal Policy Institute Executive Director Jeff McLynch.

“The proposed business tax cuts will not create jobs or foster economic growth, but will instead drain millions of dollars out of the budget each year,” added McLynch. “New Hampshire can do better.  Rather than add to the long list of tax cuts it has made in recent years, New Hampshire should invest in the future by providing needed resources to public colleges and universities, and protect the most vulnerable among us today.”

The Republicans in the House and the Senate have their priorities all wrong.  Their immoral budget will hurt tens of thousands of hard working Granite Staters and line the pockets of the wealthy.

We Need A New Hampshire Senate That Puts People Above Big Business

Cutting Taxes 3-dThis week the Republican controlled State Senate chose to put business profits ahead of working families, by voting to cut taxes for big business.

The New Hampshire Fiscal Policy Institute reported, “SB 1, which would lower the business profits tax (BPT) rate, and SB 2, which would lower the business enterprise tax (BET) rate, together likely would reduce state revenue by nearly $80 million on a biennial basis once fully phased in.”

That’s right boys and girls, the GOP wants to slash $80 million dollars from our budget and give that all to big business. $80 million dollars is a lot of money. That would build a lot of bridges, pave a lot of roads, repair a lot of schools, and employee a lot of people.

“These business tax cuts will not create jobs or boost the economy, but instead will drain millions of dollars out of the state budget each year,” said Jeff McLynch, executive director of the New Hampshire Fiscal Policy Institute.

The Union Leader reported, “(Democrats) noted only 1 percent of the businesses in the state pay 76 percent of the business profits tax, meaning large out-of-state corporations produce the bulk of the revenue. ‘This is a giveaway to large, out-of-state corporations,’ said Sen. David Pierce, D-Hanover. ‘It puts the interests of large, out-of-state corporations ahead of the needs of the people of New Hampshire and ahead of the needs of the state’s small businesses.’”

“Senate Republicans are so obsessed with implementing the Koch Brothers agenda of more tax giveaways for big businesses that they’re willing to blow a $78 million hole in the budget and make middle class families and small businesses pay the price,” said Raymond Buckley, Chair of the NH Democratic Party.

Cutting taxes is the mantra of the Republican Party. Cut taxes for businesses and voila` economic prosperity and budgets overflowing with tax revenues. It is the cure all for everything! Cut taxes and more businesses will move here then with the additional revenue we can build whatever we need. We need new bridges, cut taxes. We cannot pay our bills this year, then cut taxes!

This trickle down theory of economics has failed so many times I have lost count. President Reagan, hero to the current Republican Party, drove our nation into debt with tax giveaways like this. The President George W. Bush doubled down on Reagan’s policies and cut taxes during wartime, leading to the worst financial meltdown since the Great Depression.

 (Image Gage Skidmore Flikr CC)

(Image Gage Skidmore Flikr CC)

More recently, Governor Sam Brownback of Kansas put this theory into action when he signed “one of the largest tax cut bills in Kansas history.”

“Since the tax cuts took effect at the beginning of 2013, Kansas has added jobs at a pace modestly slower than the country as a whole. The earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well.” (Read more here.)

It worked so well that Kansas has had their credit rating downgraded. Standard and Poor’s lowered the state’s credit ratingbecause of theses tax cuts.

“The downgrades reflect our view of a structurally unbalanced budget, following state income tax cuts that have not been matched with offsetting ongoing expenditure cuts in the fiscal 2015 budget,” said Standard & Poor’s credit analyst David Hitchcock in a release.

Yet even after the downgrade, Gov. Brownback believes that cutting taxes is the way to grow your economy. “We need jobs and we have proven the way to that is through lower taxes,” Brownback told the press.

However others have outright rejected the idea that lowering business taxes and keeping the minimum wage low will attract new business to the state.

Minnesota took a very different approach. They raised taxes on the wealthy and raised their minimum wage.

“Every Minnesotan will pay more under this tax bill, and unfortunately it’s going to harm Minnesota’s economy and hurt job growth in the state,” said House Minority Leader Kurt Daudt, R-Crown.

The thing is that Minority Leader Kurt was absolutely wrong! This week it was reported that due to the progressive agenda of the Governor and the Legislature, Minnesota is expecting to have a $2 billion dollar surplus!

Minnesota’s State Economist Laura Kalambokidis said rising wages and lower gas prices mean more money for consumers and thus more taxes for the state. Meanwhile, the state will save more than $100 million over the next two years because there will be fewer than expected students in poverty and with special needs, as well as fewer students overall.”

Minnesota Governor Mark Dayton plans to use the additional money by investing in schools, implementing a fully funded Pre-K program, and to conduct some much needed infrastructure repairs.

I guess we need to ask ourselves, what type of New Hampshire do we want? Do we want a state that gets downgraded, has sluggish job growth, and stagnant wages? If so, then we should definitely cut taxes for these large corporations.

Or, do we want a state that is rebuilding our failing roads and bridges, investing and expanding public education, and building a strong and thriving economy? That’s the New Hampshire I want, and cutting taxes is the wrong approach.

Cutting taxes is not the magic solution to every problem. Someone once said, you can tell me what you value, however, me your budget and I will tell you what you truly value.

If we enact these tax cut for large corporations, who are we really helping? Big Business or real Granite Staters.

Senate Vote for Business Tax Cuts Limits State’s Ability to Invest in Economic Growth

CONCORD, NH – The Senate today voted in favor of providing tax breaks for businesses that will reduce the state’s ability to make vital investments in education, infrastructure, and other services essential to supporting a strong workforce and fostering a vibrant economy.

“These business tax cuts will not create jobs or boost the economy, but instead will drain millions of dollars out of the state budget each year,” said Jeff McLynch, executive director of the New Hampshire Fiscal Policy Institute. “The revenue loss in the upcoming biennium is about the size of the annual General Fund budget for the Department of Resources and Economic Development or more than one and half times that of the Department of Justice. That is before the cost of the tax cuts begins to balloon in future years. Back-loaded tax cuts like the ones the Senate approved today are fiscally irresponsible and not in New Hampshire’s best interest today or in the future.”

SB 1, which would lower the business profits tax (BPT) rate, and SB 2, which would lower the business enterprise tax (BET) rate, together likely would reduce state revenue by nearly $80 million on a biennial basis once fully phased in.

“Contrary to proponents’ claims, these business tax cuts will not pay for themselves, but they will likely lead to significant cuts in the public structures and services vital to sustained and widely-shared economic prosperity,” added McLynch. “To ensure the state remains attractive to residents, workers, and entrepreneurs, New Hampshire must invest in quality schools, in affordable higher education, in safe roads and bridges, and in healthy, vibrant communities.”

“Time and time again, we have seen that business tax cuts don’t pay for themselves,” said Senator Woodburn. “The question I still have for my Republican colleagues is: Who’s going to pay? These tax giveaways will have an enormous cost for our people, businesses and economy—almost $200 million in lost revenue through the year 2020.”

“Our businesses need workers and reductions in electric rates before they need a 30th tax reduction in 8 years,” said Sen. Lou D’Allesandro, Vice Chair of the Senate Ways and Means Committee. “New Hampshire is a great place to do business already and these tax cuts do nothing to address the real problems facing our businesses.”

“No evidence was offered that this expands opportunity for anyone,” said Sen. Feltes, member of the Senate Ways and Means Committee. “Businesses need a modern and safe infrastructure, high-quality schools, and healthy, safe and livable communities. These irresponsible tax cuts will hurt our ability to provide these critical economic priorities.”

New Hampshire’s revenue system has yet to fully recover from the national recession of 2007 through 2009. At the close of FY 2014, General and Education Fund revenue amounted to $2.17 billion. After adjusting for inflation, that sum is approximately 12 percent or roughly $290 million less than what the state collected from the same sources in FY 2008. Between FY 2008 and FY 2014, the combination of the BPT and BET, after adjusting for inflation, has dropped almost 20 percent or just over $136 million, due in part to numerous tax cuts put in place in recent years.

Jeff McLynch provided testimony outlining the shortcomings of proposed business tax cuts at the Senate Ways and Means Committee’s January 20 public hearing. The testimony is available online.

The New Hampshire Fiscal Policy Institute is an independent, non-profit, non-partisan organization dedicated to exploring, developing, and promoting public policies that foster economic opportunity and prosperity for all New Hampshire residents, with an emphasis on low- and moderate-income families and individuals. Learn more at www.nhfpi.org.

Proving Once Again That Tax Cuts For The Wealthy “Job Creators” Do Not Work, S&P Lowers Kansas’s Credit Rating

"Kansas Apologizes" by David Shankbone via Wikimedia Commons

Photo from October 30, 2010 “Rally to Restore Sanity” – by David Shankbone via Wikimedia Commons

For decades, the right-wing has held fast to its belief that tax cuts can fix the economy and end government deficits.

Nevermind that the idea — cutting taxes would somehow increase government revenues? — never made much sense.

They’ve kept the faith, despite all evidence to the contrary.

Myself, I think it’s long past time for the right wing to give up on this theory. I mean: at some point, shouldn’t people be able to accept the evidence, even if it goes against their beliefs?

I mean, even Republican leaders eventually gave up on it.

CBPP_effects_of_KS_tax_cutsBut two years ago, the Tea Partiers down in Kansas decided to try, try again… and Governor Sam Brownback signed “one of the largest tax cut bills in Kansas history.”

Even though many Republicans in the state legislature opposed it. (Republican Senate President Steve Morris told the press: “It is not good public policy.” He also called the tax plan backed by the tea party “very reckless.”)

Since then, there has been no evidence of any economic boom. “Since the tax cuts took effect at the beginning of 2013, Kansas has added jobs at a pace modestly slower than the country as a whole. The earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well.” (Read more here.)

And yesterday, the chickens came home to roost. Standard and Poor’s lowered the state’s credit rating, because of the tax cuts.

“The downgrades reflect our view of a structurally unbalanced budget, following state income tax cuts that have not been matched with offsetting ongoing expenditure cuts in the fiscal 2015 budget,” said Standard & Poor’s credit analyst David Hitchcock in a release.

The rating agency gave the state a “negative” outlook on both ratings and projects that the state will face serious budget woes by the end of fiscal year 2015.

But Brownback still didn’t seem to get the message. “We need jobs and we have proven the way to that is through lower taxes,” he told the press – even after the ratings downgrade.

State Representative Jim Ward: “When presented concrete evidence of a fiscal crisis … he denies it exists. He blames the people who bring the data. You cannot live in a world where you reject all information that doesn’t feed into your ideology.”

Except… it looks like some people can.

Kids Or Corporations? Which Do We Value More?

Image by Rocksee (Flickr CC)

Image by Rocksee (Flickr CC)

From Pennsylvania, this story:

Governor Tom Corbett cut corporate taxes by $1.2 billion.  Then he cut nearly $1 billion dollars from the state’s education budget.  Then he acted shocked when schools from Philadelphia to Pittsburg were forced to close.

Then a child died.

From the AFT: “We don’t know if a school nurse could have saved this young boy. But we do know every child deserves a full-time nurse in his or her school. We do know all parents deserve to know that their child will be safe and his or her most basic needs will be tended to at school. We do know that all Philadelphia children deserve better.”

The boy wasn’t the first child who died.  Twelve-year-old Laporshia Massey died from asthma complications that started while she was at school.  Could her death have been prevented there had been a school nurse on staff?

Of course, Governor Corbett responded by attacking the teachers’ unions – without mentioning the budget hole created by his corporate tax cuts.

Yep, another politician who wants our teachers to make “sacrifices.”

(But not the corporations.  Somehow, they never ask the corporations to make “sacrifices.”)

But it’s not just Pennsylvania.

A friend of mine is an elementary school art teacher, whose classroom is out of supplies and whose budget is out of money.  How do you teach elementary school art without construction paper and glue sticks?

A middle school student complains about seeing her teachers outside of school.  “It’s really embarrassing when you run into your teacher in a restaurant,” she says.  “But it’s even more embarrassing when your teacher is your server at the restaurant.  Why can’t we pay teachers enough that they don’t need a second job to survive?”

All across the country we hear stories of states being forced “make the hard choices” when it comes to budgets.  They try to make us believe that they have no other choice than to cut programs to keep their budgets balanced.  They never mention the possibility of restoring revenues that were given away as tax cuts.

A strong public education is vital to our communities.  A strong education is the foundation of the American Dream.  Public schools provide the tools necessary to lift people up, to find good high paying work, and to get that little house with the white picket fence.  A strong public education system — which I believe should include higher education — is the key to countering America’s poverty problems, too.

But budget cuts have forced some schools to close completely, leaving children and their parents scrambling.  Teacher layoffs have led to larger class sizes, and less time to help students.  Budget cuts are forcing teachers and parents to supply schools with basic necessities like paper, pens, chalk, and paper towels out of their own pockets.

Cuts to school lunch programs mean that too many teachers are reaching into their own pockets to buy lunch for students who would otherwise go hungry.

Yet corporations keep their tax cuts.

The American Federation of Teachers and the National Education Association are on the front lines of this fight to protect and preserve our public education system.  AFT is running a new campaign entitled “reclaim the promise” that challenges people to stand up for public education.

Stand up and fight to ensure that children in all communities get access to a high quality education.

Stand up and say “NO” to the government leaders who would rather cut funding to schools than ask businesses to pay their taxes.

Stand up and say: “NO MORE hungry children.”

And “NO MORE children dead, without a school nurse around.”

 

(Special Hat-Tip to my friends Kevin Mahoney and Sean Kitchen at Raging Chicken Press for always keeping the light shining on the atrocity of Governor Corbett’s attack on public schools and public workers.)

Racing to Blame Public Workers for State Finances

Suffolk DownsAnd… they’re off, on a new round of attacks on public pension systems nationwide.

When you hear about this week’s Mercatus Center report on the financial condition of all 50 states… start by considering the source.  Mercatus is housed at George Mason University, so it has a veneer of academic credibility.  But here’s what SourceWatch has to say:

“The Mercatus Center was founded and is funded by the Koch Family Foundations. According to financial records, the Koch family has contributed more than thirty million dollars to George Mason, much of which has gone to the Mercatus Center, a nonprofit organization.”

The last time George Mason University really hit the headlines was in 2012, when a faculty economist authored a doomsday report about how horribly Sequester cuts would affect… the Defense Industry.

(Meanwhile, military contractors seem to be doing just fine.  Back in November’s budget compromise, Congress gave the Pentagon more than $1.3 billion for programs it didn’t want.  And according to Reuters, there’s not much oversight of all that money.  “The Pentagon … has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for.”)

But I digress.

The thing that strikes me, about this week’s Mercatus report, is that once again it tries to blame public workers for whatever is wrong with state finances.

  • It doesn’t say a thing about corporate giveaways, such as Washington state’s recent biggest-in-US-history giveaway of $8.7 billion to Boeing.

According to a New York Times analysis, these so-called “economic incentives” add up to big money: “Oklahoma and West Virginia give up amounts equal to about one-third of their budgets, and Maine allocates nearly a fifth.”   But do these incentives actually work?  The Times couldn’t find any evidence.

  • It doesn’t say a thing about revenues.  Just try Googling “state tax cuts”.  Out in Wisconsin, Scott Walker’s going to cut taxes (even more than he already has).  Chris Christie wants to cut taxes (even more).  Dave Heineman, out in Nebraska, is going to cut taxes.  Even Andrew Cuomo is pitching tax cuts.

But, let me digress again.  Out there in Nebraska, they actually studied the “economic stimulus” effect of tax cuts.  Here’s what they found:  even accounting for the “stimulus effect”, a $100 million reduction in regressive sales/use taxes would have a “net revenue impact” of (negative) $79.45 million… while a $100 million cut in income taxes would have an impact of (negative) $93.58 million. That’s right, neither of these types of tax cuts would be good for the state budget; but one of them is much worse than the other.  So, guess which type of taxes Governor Heineman wants to cut (rather than expanding Medicaid).

  • It doesn’t say a thing about how Wall Street’s “robust recovery” has affected public pension funds.  After losing a TRILLION dollars between October 2007 and October 2008, public pension trust funds are finally beginning to recover.  Here in New Hampshire, last year, investment returns added $818 million to our Retirement System Trust Fund.  How big is that number?  The NHRS Trust Fund started the year with less than $6 billion.  It paid benefits totaling about $630 million.  Do the math yourself: last year, investment returns paid for every single penny of benefits… and still increased the Trust Fund.

So yeah, maybe you should take all those Mercatus Center headlines with a grain of salt.

Or a bushel.

As Amy Traub says: your mailman didn’t make the economy collapse.

And public employees aren’t responsible for the damage that has been done to their state budgets.  (We’re just the workers, remember?  It’s the elected officials who decide how many billions to give away to private corporations.)

NH Small Businesses Speak Out Against Fiscal Cliff

Every day we move closer to the so-called ‘Fiscal Cliff’.  The deadline that could instantly change the tax rates for every American.  Middle class Americans are being held hostage by the Republicans in the US House who refuse to raise the taxes on the ultra wealthy in order to reach a deal.

Many of the Republicans in Congress are concerned that tax increases on the ‘top 2%’ would end up hurting small businesses.  This is a complete fallacy.  ‘The Action’ in conjunction with other labor and community allies are encouraging Congress to reach an agreement to put ‘the middle class, over millionaires’.

Yesterday in a press conference in Concord small business owners came together to explain what the ‘fiscal cliff’ would mean to their businesses.  All of which agreed raising taxes on the middle class would hurt their businesses. Most of the concern from small business is that consumer spending would drop due to a higher cost of taxes.

Consumer spending is what drives our economy. It fuels our small businesses.  If the middle class does not have money to spend, or is afraid to spend it due to economic concerns, that is when small businesses are hurt.

In an interview with WBIN, Laurie Miller said “economy is turning a corner.”  She mentioned gas prices being lower and stock markets doing better.  Miller also send a message directly to our political leaders.  She said, “people need to get down and dirty and sit in a room and do what is best for this country instead of politics.”

I could not agree more.  Our elected officials are in Washington to represent us not corporations and personal agenda.  They should be acting on what is best for the country not 2% of the country.

The President and Speaker Boehner are set to meet over the weekend to try to resolve the ‘fiscal cliff’ before the sequestration cuts are triggered and the middle class tax cuts expire.

*  *  *  *  *  *  *

Be sure to check out all the interviews with NH small business owners who are urging Congress to take action before taxes go up on the middle class.

Sue McCoo, owner of the Capital Craftsman and Romance Jewelers

Laura Miller, owner of Imagination Village in Concord

Don Brueggeman, a manager at The Works Bakery Cafe

Lorrie Carey, owner of Marshall’s Flowers

Changing the Conversation – Earned Benefits are NOT Entitlements

(Photo by Robert Neff)

Social Security and Medicare are not “entitlements” – except in the sense that everyone should be entitled to the money (including interest) that they deposit in a bank account.

Our grandparents, parents and now you and I pay into these programs with every check we receive.  Pull out your paystub and look.  You will see deductions for FICA and for Medicare.  Why are these programs being included in conversations surrounding the “Fiscal Cliff”? 

For decades now, right-wing think tanks like the Heritage Foundation have been telling us we must “replace the culture of entitlements with one of mutual responsibility.”  But workers have always been responsible.  The only irresponsibility here belongs to Congress, who started borrowing from our fund  beginning in the Reagan years.

The Social Security Act of 1935 was a bipartisan accomplishment.  Politicians on both sides of aisle knew that disabled veterans returning from war, widows with dependent children and retirees to old to work, needed help.  This was not a government handout – it was a plan through which each employee would pay an income tax.  The money would be pooled together, and with interest, payments would be made to qualified recipients.

Why are some politicians trying to make us believe that Social Security is bankrupt?  The NH Sentinel Source.com reported in April 2011 that, “working Americans have paid so much in Social Security payroll taxes during the past three decades that they have built up a $2.6 trillion surplus in the account.”  Unfortunately, this account is now filled with “IOU’s” – and some politicians prefer to change the rules rather than looking at long-term solutions.

Senator Kelly Ayotte is one who believes that Social Security should be cut.  She voted for the Ryan Budet, which, according to the Kaiser Foundation, would harm 3.3 million people between the ages of 65-66.  This is not a reasonable answer or solution to the country’s fiscal situation.  Politicians should be protecting – not sacrificing – these programs that employees have paid into, all these decades.

It is up to all of us as American workers to ensure these programs will be there when we need them.  This begins with changing the conversation – and in particular, the wording.  Social Security and Medicare are not entitlements but Earned Benefits.  Our politicians must understand we will not give up on what is rightfully ours.

Using Retirement Funds to Balance the Budget


Up here in New Hampshire, we have some experience with politicians trying to use public workers’ retirement funds to balance the budget.

Back when Craig Benson was Governor, he wanted to use money from the public employee retirement system to balance the state budget.

But up here in New Hampshire, the public didn’t let him get away with that.  In 1984, Granite State voters amended our state Constitution to protect our employees’ retirement benefits.  New Hampshire Constitution Article 36-a [Use of Retirement Funds] provides:

“The employer contributions certified as payable to the New Hampshire retirement system … shall be appropriated each fiscal year … All of the assets and proceeds, and income there from, of the New Hampshire retirement system … shall be held, invested or disbursed as in trust for the exclusive purpose of providing for such benefits and shall not be encumbered for, or diverted to, any other purposes.”

Down in Washington DC, the federal government hasn’t been quite so careful.  Down in DC, public employee retirement funds are regularly used to balance the budget.

In fact, when the federal government hit the debt ceiling in May 2011, public employee retirement contributions were used to keep the federal government going for more than two months (until Congressional Republicans finally agreed to increase the debt limit).

At last report,

  • more than $800 billion of the federal debt was owed to the federal employees’ retirement system;
  • more than $600 billion of the federal debt was owed to military employees’ retirement programs;
  • more than $45 billion of the federal debt was owed to the Postal Service Retiree Health Benefits Fund.

State and local employees also own a significant chunk of the federal debt.  At last report, pension systems for state and local government employees held almost $190 billion in Treasury securities.

Adding it all up, the nation owes about $1.6 trillion to the various public employees’ retirement systems.  (That’s direct debt – not including unfunded liabilities.)

That’s only slightly more than what tax cuts for the wealthiest 5% have cost the Treasury since 2001.

Should we really be surprised that right-wing Republicans are trying so hard to “reform” public pensions?

The business lobbying group ALEC (“American Legislative Exchange Council”) has led the crusade.  “Taxpayers are no longer willing to bear the increasing cost of these plans… They are demanding reforms that will bring these plans into line with pension and OPEB benefits offered in the private sector.”  (What an interesting comparison!  Federal law generally prohibits private sector pension plans from loaning money to the company that sponsors the plan.)

As Chairman of the House Budget Committee, Rep. Paul Ryan followed ALEC’s lead – almost word-for-word.

Up here in the Granite State, we believe that government should fulfill the promises it has made to its employees.  We even amended our state constitution to ensure that public employees’ retirement funds would be used only to pay retirement benefits.

It’s time for the country to stop using public employee retirement funds to pay the cost of extending tax cuts for the wealthy.

It’s time for Congressional Republicans to stop trying to weasel out of their obligations to federal employees.

It’s time to keep the country’s promises.  (Now that’s a conservative value.)

——————————————————————–

Wait!  That $45 billion borrowed from the Postal Service Retiree Health Benefits Fund deserves a closer look.

The Post Office is losing money.  Most of that deficit is being caused by Congressionally-mandated payments to the Postal Service Retiree Health Benefits Fund.   That mandate dates back to the Postal Accountability and Enhancement Act of 2006.

Guess what else happened in 2006?  Just months before Congress decided to have the Postal Service pre-fund retiree benefits (and loan that money to the US Treasury), the country had hit the debt ceiling, and had borrowed from the federal employees’ retirement system to pay the bills.

(No, by the time 2006 rolled around, the Bush tax cuts hadn’t “jump started” the economy or started to erase the federal debt.  So Congress used federal employees’ retirement contributions as a Rainy Day Fund.)

Kind of convenient, isn’t it?  The country needs to borrow money, and suddenly there’s a new Fund to borrow from.

Only now, that Fund is drowning the Postal Service in debt.

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