Does the U.S. need additional revenue?

2013-04-15T00:00:00Z Does the U.S. need additional revenue?William Rice Arizona Daily Star
April 15, 2013 12:00 am  • 

WASHINGTON - America's economy is poised to roar ahead if only Washington would stop holding it back.

Ever since the Great Recession officially ended, the private sector has been adding jobs. What's kept the economy in low gear and the unemployment rate stubbornly high has been the shrinking of government workforces: cops, teachers and other valuable public employees let go in the face of inadequate tax revenue.

Most of these layoffs occurred at the state and local level, but a vigorous federal response could have prevented them.

Estimates are that the aid to localities included in the 2009 federal recovery act - aka, the "stimulus" - saved 400,000 jobs in both the public and private sector. While more could have been done then, the federal government has stopped being part of the solution and become part of the problem.

The indiscriminate, across-the-board federal budget cuts known as the sequester will cost the American economy 750,000 jobs, according to the nonpartisan Congressional Budget Office.

Meanwhile, wages on 2 million federal employees - janitors to security guards to park rangers to air traffic controllers - have been frozen for over two years, diminishing the purchasing power of middle-class families.

All these government cutbacks are what's known as "austerity," an extremely effective policy if your goal is to turn a fragile recovery into another recession.

What fiscal policy should Washington adopt?

First, acknowledge that we can't cut our way out of debt, especially if we want to support our economy at the same time. We need a balanced approach of thoughtful spending curbs and increased revenue.

Yet over the past three years of deficit reduction deals, we've cut 2 1/2 times more from programs that serve and protect the American public than we've raised in new revenue from wealthy interests. Unfortunately, the sequester further skews that ratio. It's high time we asked super-rich households and super profitable corporations to pay their fair share.

Eliminating tax deductions enjoyed exclusively by wealthy families could raise $500 billion over the next decade. Closing corporate tax loopholes that encourage companies to hide profits and ship jobs overseas could raise another $600 billion.

Sensible tax reform like that would help end the budget drama. The well-to-do would be among the chief beneficiaries: the inconvenience of slightly higher taxes would be outweighed by the investing certainty created by a federal government in control of its finances.

Despite the claims of certain members of Congress - who ironically are federal employees themselves - government can and does create jobs through direct employment, as well as public investment in social insurance, economic development, national defense, education and scores of other vital activities.

If we don't want to go deeper in debt, we need sufficient tax revenue from those best able to supply it to support job-creating federal investment in our still-struggling economy.

Yes: Cutbacks are hurting economy

Editor's note

Every Monday we offer pro/con pieces from the McClatchy-Tribune News Service to give readers a broad view of issues.

William Rice is a tax fairness specialist for Americans for Democratic Action.

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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