Balance the Budget on the Backs of the Poor

As the budget infighting continues between sane House Republicans and the Tea Partiers, GOP leaders are turning to moderate Democrats for help in passing this year’s federal budget. As of April 1st, they seem to have settled on a not-so-modest $33 billion in cuts (Tea Partiers demand no less than $61 billion). While the federal budget situation seems dire, cuts to state budgets are even more severe. Thirty-nine states are proposing major cuts in core public services. Twenty-one want severe cuts in funding for public education. Twenty-five have their targets set on health care, specifically for low-income individuals. To really give the middle finger to the working class and poor, governors in seven states are proposing tax cuts for corporations. Governor Snyder of Michigan wants to offset the loss in revenue from corporate income tax cuts by raising taxes on, surprise, low-income working class families.

Politicians say that everyone must “share in the pain,” yet they refuse to raise taxes on the very people who can afford to help out. As Mark Bittman argued recently, the budget has become a moral document. The United States is capable of closing its budgets gaps, rebuilding its roads and infrastructure, and strengthening its social safety net so that social mobility can once again become a reality for low-income individuals. Politicians can do it by decimating education and slashing programs for the poor, or they can reduce the military budget, close corporate tax loopholes, and modestly raise taxes on those who can easily afford to pay. Which seems like the better option?

Gross inequality of wealth has become the moral dilemma of our generation. The facts speak for themselves. The wealthiest 400 individuals in the United States possess more wealth than half of all American households combined. CEOs make an average of 530 times more than the average blue collar worker. In 2010, profits of corporations grew at the fastest rate since record keeping began in the 1950s. It was recently reported that GE, one of the world’s largest companies, made $14 billion dollars in profit last year. Due to loopholes, accounting tricks, and tax credits, not a single penny of that $14 billion went to the federal government as income tax. Meanwhile, average Americans suffer. Home foreclosure rates surge, poverty, unemployment, and underemployment are pushing all-time highs, the percentage of adults lacking health insurance continues to rise, wages remain stagnant, and one in four children report occasionally going to bed hungry.

Michael Moore was right when he said that America is not broke. It isn’t. $14 trillion dollars of annual output is not pocket change. But over the last 40 years, a massive transfer of wealth has been taking place. The United States has watched its manufacturing base crumble, and with it, good unionized jobs. Middle class wages have remained largely steady for 40 years despite record economic growth, rising wages for the top earners, and staggering corporate profits. The middle class is being squeezed and the poor are going hungry. And yet, the rich are better off than they ever have been.

I come from a family of small-business conservatives. My father works in the fishing, farming, and forestry industries. My uncles run a chain of successful Maine retail stores. They are firm believers in free-market rugged individualism. Their own father embodied the American dream. Through hard work and dedication, he pulled himself out of obscurity and poverty to become a very successful and influential businessman. Anybody else, they argue, can do the same.

But, as any economist will tell you, free markets aren’t fair. They are brutal. And from time to time they fail. The government exists to do more than provide security. It is there to provide a safety net for when an individual gets sick or injured. It is there to help when economic cycles (and greedy individuals) plunge the nation into bouts of extended unemployment. The government should exist to balance out the irregularities of the markets and to prevent the worst excesses of corporate greed. It used to.

I am not advocating that the government step in and simply take money from the rich and hand it to the poor, as many conservatives crudely suggest. I am advocating that the government properly regulate against the excesses of capitalism. I am advocating that multi-millionaires and billionaires pay a slightly larger percentage of their massive wealth to ensure that children don’t go to sleep hungry, that even more kids are not crammed into already overcrowded classrooms, and that low-income individuals who need medical attention don’t put off seeing a doctor until it is too late.
Politicians who suggest that massive cuts to education, health care, and core social safety net programs are needed to balance the budget are deluded. Yes, cuts do need to be made. Everybody must share in the pain of reduced spending. But let’s make sure that the rich pay their fair share as well. We do not need to balance the budget wholly on the backs of the already suffering poor.

In the past, class warfare was an ineffectual political strategy. As surveys point out, the less well off don’t necessarily resent the rich. Like most others, they relish the idea of possibly joining their wealthy ranks someday. How extraordinarily and obscenely wealthy do the rich need to get, and how much does the rest of the country need to suffer, before the masses realize that this gross inequality of wealth is not good for our country? Remember, Democracy only works when we claim it as our own. I am not advocating that we abandon a market economy. Let’s just restore some sense to our polity that is looking more like a plutocracy every day.