The debate about the national economy seems to have slipped into the shadows. You may be breathing a sigh of relief. Shadows on the budget are inevitable with the Congress focusing on immigration and the press focusing on the attack in Boston.
We’ve seemed to weather a tornado of crisis: Sequestration, the raising of debt lids, even teetering at the edge of madness of a fiscal cliff.
The next crisis is expected this summer when we hit another debt lid problem. Between now and then progressives need to focus on a common agenda and gird for the fight. Getting enraptured with the crisis du jour does little to direction of our national debate.
Here’s my plan.
Let’s tax corporations that are using overseas loopholes to pay little or no taxes and use the money to create jobs.
Yep. A direct transfer of taxes from closed loopholes into jobs.
Citizens for Tax Justice issued a report, identifying corporations that used tax loopholes to avoid taxation. The report, entitled “Representation Without Taxation” was issued in January of 2012. It found: “280 profitable Fortune 500 companies collectively paid an effective federal income tax rate of 18.5 percent, about half of the statutory 35 percent corporate tax rate, while receiving $223 billion in tax subsidies.”
There are some years in which major U.S. companies paid no taxes at all. Think Progress reported last April that “In total, 2008-11 federal income taxes for the 30 companies remained negative, despite $205 billion in pretax U.S. profits. Overall, they enjoyed an average effective federal income tax rate of –3.1 percent over the four years.”
Small business owners recently surveyed by our partners at the Main Street Alliance overwhelmingly supported redressing the imbalance between the taxes that they pay and the taxes that are not being paid by large corporations. (You can see this survey called Small Business Owners Views on Corporate Tax Reform at www.mainstreetalliance.org.)
Almost every politician who speaks on the subject uses this phrase: “We have to get our fiscal house in order.” I am certain that this little statement must test well in focus groups. But it is a code for a flawed economic policy of austerity that is driving Europe into regression and keeping our own economy weak.
Employment growth in the U.S. is stagnant and likely to remain so as already decided budget policies cut public employment by the hundreds of thousands. Consumer demand remains weak and small businesses are not expanding. It seems the economy is in dire need of a new jolt of life.
Nobel Laureate economist Paul Krugman observes in yesterday’s New York Times: ”And let’s be clear: this is a policy decision. The main reason our economic recovery has been so weak is that, spooked by fear-mongering over debt, we’ve been doing exactly what basic macroeconomics says you shouldn’t do – cutting government spending in the face of a depressed economy.”
Even the great deficit hawks Simpson and Bowles called the recent cuts “mindless” and proposed delaying their own deficit reduction plans until 2016.
But the scene is all set for a big austerity bargain – a bargain being sought by the President and included in competing blueprints have been passed in each House of the Congress.
Each of these plans would yank another two or four or seven trillion dollars out of public spending. The House budget combines major spending cuts with cuts to taxes primarily for the wealthy. Both the President and the Senate propose raising some revenues from corporations and the wealthy. But all of these plans contain more cuts and no overall gains.
To be fair, the President and the Senate budgets do propose some investments in infrastructure, manufacturing, education, and research. But the underlying policy is to cut government spending, thus further depressing the main economic sector now suffering job losses.
Let’s be clear—paying companies to not pay taxes at the rate of -3.1% is a tough pill to swallow. But closing one major tax loophole, would give the job market a boost it hasn’t seen in any of the corporate transfers during the bailout.
In the sure knowledge that the way to save ourselves from debt is to grow the economy, let’s not use one dime of the revenues raised by closing these loopholes for anything but job growth.
I know that we will have to push back against efforts to cut benefits for Medicare and Medicaid. We also will have to push back against efforts to reduce Social Security benefits, in spite of the fact that Social Security has no impact on the deficit.
But let’s pose the economic dilemma in the starkest terms. If the corporate tax dodgers won’t create the jobs, we will.