Adding ‘Headroom’ to the Debt Limit? Thank our Federal Employees and Postal Carriers

US CapitolA few days ago, Treasury Secretary Timothy Geithner told Congress that the federal government would reach its debt limit at the end of this year.  As of January 1st, Secretary Geithner will be taking “extraordinary measures” to buy another two months’ time  for Congress to resolve its self-created fiscal cliff/debt limit crisis.

What are those “extraordinary measures”?  Almost all of them involve using the retirement funds of federal employees and postal workers to create artificial “headroom” under the debt limit.  You can read the details here.

Create your own fiscal crisis… then use it as justification to borrow from employees’ retirement funds (while complaining that long-promised retirement benefits are “not affordable”).  That’s what politicians tried to do here in New Hampshire, back in the early 1980s.

We’re having déjà vu all over again, watching the same scenario play out on the national stage all these decades later.

As of Tuesday, federal and postal employees’ retirement funds will become “headroom” under the debt limit.  Maybe the extra two months will give Speaker Boehner time to reconsider the GOP’s  allegiance to the ultra-rich.  Maybe it will give Congress time to fix the crisis it created.

In the meantime: to all those federal employees and postal carriers out there, “Thanks for the headroom!”

Read more about political attacks on federal employees here.

Read more about political attacks on the US Postal Service here.

 

According to Bush Economists: His Tax Cuts Don’t Really Improve the Economy

Another thing to remember, as you’re watching the Fiscal Cliff negotiations:

Back in 2006, President George Bush asked the US Treasury Department to analyze what would happen to the economy if his tax cuts were made permanent.  Treasury economists conducted a “dynamic analysis” of the tax cuts, which was clearly intended to provide a political justification for making the tax cuts permanent.

best case scenario for economic impacts of Bush Tax Cuts

This is the Treasury’s “best case” scenario, which
is based on extremely optimistic assumptions.
Source of chart: Center on Budget and Policy Priorities.

But here’s what they found, instead:

even under favorable assumptions, making the tax cuts permanent would have a barely perceptible impact on the economy.  Under more realistic assumptions, the Treasury study finds that the tax cuts could even hurt the economy. In addition, the study casts doubt on claims that the tax cuts are responsible for much of the recent growth in investment and jobs.  It finds that making the tax cuts permanent would lead initially to lower levels of investment, and would result over the longer term in lower levels of employment (i.e., in fewer jobs).

What ?!?

The Treasury study finds that making the tax cuts permanent would reduce long-run labor supply (i.e., the number of people working and the number of hours they work) by 0.3 percent.

Three-tenths of one percent in today’s labor market translates into about 468,000 jobs.

If we end the Bush tax cuts, will those jobs come back?

Fiscal Cliff: Who is “entitled” to what?

Something else to remember, as you’re watching news coverage of the Fiscal Cliff negotiations:

The tax rates that GOP Congressional leaders are trying so hard to defend are relatively recent – and the public has never supported them.

Washington Post Poll September 11 2001Just months after the first round of tax cuts was passed, in 2001, a Washington Post poll found that 57% of Americans wanted to roll back the tax cuts in order to preserve the federal budget surplus. (Yes, we had a surplus, back then.)

There’s more:

President Bush’s budget director had just warned congressional Republicans that “it was likely the government would tap the Social Security surplus this year, contradicting what he had been saying only a few weeks earlier.”

That same Washington Post poll found that “an overwhelming 92 percent of those surveyed said they opposed using Social Security funds” for things other than retirement benefits.

That was in 2001. Two years later, it was clear that the first round of Bush tax cuts hadn’t “jump-started” the economy – so the White House pushed through another round. This time, the bill had so little support it almost didn’t pass the Senate. GOP stalwarts John McCain, Lincoln Chafee and Olympia Snowe all voted against it. The Senate split 50-50 – and Vice President Dick Cheney cast the deciding vote.

That’s right… Dick Cheney was responsible for passing the tax cuts that House Speaker John Boehner is now trying so hard to defend.

“Entitlements”?

In recent weeks, Speaker Boehner has been talking about tax cuts for the wealthy as if they’re somehow sacred. He doesn’t seem to care what he has to sacrifice, to protect those high-income taxpayers.

Speaker Boehner is insisting on cuts to “entitlement programs” such as Social Security, Medicare and Medicaid – before he will agree to any fiscal cliff “compromise”.

And if taxes are going to be raised – well, guess who Speaker Boehner expects to pay the price? Here’s Senate President Harry Reid’s analysis of Speaker Boehner’s latest proposal, earlier today:

“Their proposal would raise taxes on millions of middle-class families,” Reid said on the Senate floor. “Their plan to raise $800 billion in revenue by eliminating popular tax deductions and credits would reach deep into pockets of middle-class families.”

Speaker Boehner wants to cut “entitlements”?!

The working families of America have paid into the Social Security system for decades, expecting to get benefits back when we retire.

High-income taxpayers owe their low tax rates to former Vice President Dick Cheney.

Who, exactly, should be entitled to what?

Read more about the fiscal cliff here.