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Where the money is: a lesson from CTU’s founders

This week Dirt Diggers Digest highlights the legacy of Margaret Haley and Catherine Goggin, two Chicago teachers who founded a federation in the 1890s which grew into the first teachers union in the nation and ultimately the Chicago Teachers Union.

When the board of education used a purported fiscal crisis to demand reductions in teachers’ salaries, Haley and Goggins “launched an intensive investigation of tax dodging by some of the largest corporations in the city, finding that property tax underpayments amounted to some $4 million a year.” That was a lot of money in 1890.

Today in Wisconsin, Governor Scott Walker is demanding that teachers and other public employees surrender not just pay and benefits, but their right to collective bargaining.  This would allow Walker and other officials to dictate terms of employment.

He says this is needed to meet a budget gap projected at $3.6 billion over the next few years.  But his recent enactment of $140 million in business tax breaks give credence to charges that his real agenda is destroying public employee unions.

This turns out to be a pattern around the nation — in states with Republican governors, as Michael Winship points out at Huffington Post. In Michigan, Rick Snyder has demanded $180 million in concessions from public workers and a billion dollars in cuts to schools, universities and local governments; he’s also pushing $1.8 billion in corporate tax cuts.

In Arizona, Jan Brewer passed $535 billion in corporate tax cuts, and now plans to kick a quarter of a million people off Medicaid.  In Florida Rick Scott is cutting essential services to pay for $4 billion in corporate and property tax cuts.

Closing deficits is not these folks’ top priority.

Last week we cited HuffPost’s report that two-thirds of corporations in Wisconsin pay no taxes, and the corporate share of tax revenue has fallen in half since 1981, according to the state’s revenue bureau.

Addressing the rhetoric of “shared sacrifice” coming from Walker, Real News Network’s Paul Jay points out that Wisconsin’s billionaires have seen their wealth continue to grow while everyone else suffers.  He says that restoring the state’s estate tax – which has brought in nothing for two years – to 2008 levels would raise $158 million a year.  Restoring it to its 2001 level, and throwing in a million-dollar exemption, would solve the state’s budget problems neatly.

Corporate tax avoidance is the target of US Uncut, a new group modeled on a movement in Great Britain.  They protested this weekend at Bank of America, which paid zero taxes [in 2009] and made over $10 billion in profits last year.

According to the Guardian, a GAO report found that 83 of the top 100 publicly-traded corporations in the U.S. use corporate tax havens to minimize their tax bills.  US Uncut says that big corporations dodge up to $100 billion in US taxes every year.

That’s a lot of money, even in 2011.  By coincidence, it’s the same amount that Republicans in Congress promised to cut from the federal budget.

In Chicago, CPS faces huge deficits, more school closings are promised, and state legislation backed by the mayor and his successor would take away teachers’ collective bargaining rights.  Meanwhile a new analysis shows that half of TIF subsidies have gone to the city’s most profitable corporations, with much of the rest going to developers of high-cost housing.  Expect that program to come under increasing scrutiny.

State of the Union and Social Security

Retirees in Illinois will be watching tomorrow’s State of the Union address and paying particular attention to indications of President Obama’s commitment to Social Security, said Barbara Franklin, president of the Illinois Alliance for Retired Americans.

Franklin is one of 30 state alliance leaders who recently signed a letter to Obama calling on him to “renew the nation’s commitment” to Social Security (pdf).

“We’d like to see the president speak up for strengthening Social Security,” Franklin said.

“It’s probably the most successful federal program, it’s funded by employees and employers, and it hasn’t contributed one dime to the deficit,” she said.

The Social Security trust fund currently has a $2.6 trillion surplus and is fully funded through 2037.

Seniors were “put on notice” when Obama formed a fiscal responsibility commission – saying “everything is on the table” — and appointed co-chairs known for their advocacy of Social Security cuts, which the commission ended up endorsing, Franklin said.

Obama has remained neutral on the plan, but Senator Richard Durbin’s vote for the proposal was viewed as representing the administration’s wishes.  Durbin spoke up specifically in favor of raising the retirement age.

Last month Robert Kuttner wrote in Politico that administration officials were urging Obama to endorse the commission’s plan in the State of the Union address, but the New York Times now reports that such an action is unlikely.

At Huffington Post last week Kuttner said “progressives…can take some credit for warning [Obama] off Social Security cuts.”

Polls showing opposition to Social Security cuts across the political spectrum – with 70 percent opposed to raising the retirement age — may have had some effect.

But in recent weeks two “centrist” think tanks with ties to the administration have released reports calling for Social Security cuts.  The Third Way, the old outfit of Bill Daley, the new chief of staff, issued a “solvency plan” which calls for $2 in benefits reductions for every $1 in additional revenue.  It calls for raising the retirement age and reducing cost of living adjustments.

The Center for American Progress has called for reducing COLA and making benefits more “progressive” – which means reducing benefits for people who earned $55,000 a year and up.

And Republicans can also be expected to press for cuts.

“I’m not sure Washington truly understand what it means to live on $325 or $400 a month,” as some Social Security recipients do, Franklin said.  “Most retirees are relying on their Social Security, and they simply cannot take any benefits cuts.”

Many seniors “don’t really understand what these [proposals] are,” but if they start moving, “there’s going to be a huge uproar in this country from seniors,” she said.  “For so many seniors, this is their income.”

She questioned the practicality of a “hardship exemption” from higher retirement ages for workers in physically demanding trades, noting that it now takes two years to get approval for Social Security disability benefits.

Franklin would like to see Obama reject his commission’s proposals.  She’d like to see him reiterate the position he took as a presidential candidate, when he opposed benefits cuts, opposed raising the retirement age, and argued that lifting the cap on incomes subject to the payroll tax would solve Social Security’s long-term problems.

“If you do that, you have enough money into the next century,” she said.

The Campaign for America’s Future has helpfully provided a short video of Obama’s earlier statements:

Obama tax plan – a threat to Social Security?

One element of the tax deal reached by President Obama and Republican leaders – a one-year reduction of the payroll tax by 2 percent – has Social Security advocates raising dire warnings.

The Strengthen Social Security coalition cites the “high likelihood” that the cuts will be extended when the first year is up – which will occur at the beginning of a hard-fought election year.  The $120 billion appropriation from the federal budget to reimburse the Social Security trust fund will be increasingly vulnerable “in a political environment dominated by debates on federal deficits.”

That could “result in a huge revenue drain to Social Security,” opening the door to “deep cuts in benefits for the middle class and eroding its support for the program,” according to an analysis by the coalition.

“We’re very concerned, and we’re keeping an eye on it,” said Emily Stuart of Illinois Alliance of Retired Americans.  ARA is a member of Strengthen Social Security.

Nancy Altman of Social Security Works says “the innocent-sounding payroll tax holiday…will lead inexorably to killing Social Security.”

She says it’s “unfathomable” that a more conservative Congress will fail to extend the cut when it expires.

Ryan Grim at Huffington Post found evidence for this among several Republican senators.  “Once something like this goes into place, a year from now, when it expires, it’ll be portrayed as a tax increase,” Senator Bob Corker (R-Tenn.) told him.

“There’s always a tendency to continue those things,” said Senator George Voinovich (R-Ohio).  “Once something comes in, it’s very difficult to change it.”

A permanent 2 percent cut in payroll tax would add significantly to the program’s long-term shortfalls, and “the pressure to cut Social Security in a slow, gradual way for younger workers will be enormous,” Altman writes, with changes in benefits forumlas that “would gradually and inexorably eviscerate the benefits of the middle class.”

The payroll tax cut replaces President Obama’s Make Work Pay tax credit, which offset employee payroll taxes for the first $8,100 of income.  Curiously, the payroll tax cut was proposed by Republicans in January 2009, and the Center for Budget and Policy Priorities compared it to Make Work Pay at the time.

CBPP found that Obama’s program had much greater stimulative effect because it got more money in the hands of low- and moderate-income taxpayers, who are more likely to spend it.  With the payroll tax cut, higher earners get much more than others.

Indeed, the New York Times notes that shifting from Make Work Pay to the payroll tax cut means taxes will actually go up for individuals making less than $20,000 and couples making less than $40,000.

The Times estimates that at least a quarter of tax savings in the Obama-Republican package will go to the top 1 percent of the population.

Meanwhile, Republicans blocked renewal of $250 annual supplemental payments to seniors who face a second year without cost-of-lliving increases in Social Security checks.

The payments are needed because Social Security cost-of-living calculations don’t take sharply rising health care costs sufficiently into account, Stuart said.

Durbin on the deficit commission

Local and national reaction to Senator Durbin’s support for the Simpson-Bowles deficit plan – and more on what raising the retirement age for Social Security really means – at Huffington Post.

Call on Durbin: No Social Security cuts

Members of the Illinois Alliance of Retired Americans and the Strengthen Social Security Campaign delivered a letter to Senator Richard Durbin this afternoon calling on him to reconsider his statement yesterday that he would support raising the retirement age to 69.

“The increase will be devastating for future retirees and especially discriminates against African-Americans, women and low-wage workers,” the letter said.

It amounts to a 13 percent benefit reduction, on top of a 13 percent reduction under 1983 legislation that will raise the retirement age to 67 by 2022, said John Gaudette of Citizen Action Illinois.

The groups point out that while life expectancy has increased by five years for upper-income men in the last quarter-century, it’s risen by just one year for lower-income men – and it’s fallen for lower-income women.

Without Social Security, more than half of older women would fall into poverty, they say.

“There are sensible solutions to help reduce the federal deficit, as well as improve Social Security long-term solvency, but cutting Social Security benefits is not one of them,” they write. “Social Security has not contributed a single penny to the deficit.”

(For more, see Durbin Defaults and Obama tax plan – a threat to Social Security?)

Deficit forum: deliberation or manipulation?

Archon Fung of Harvard writes in Huffington Post of his disappointment over criticism of America Speaks’s forums on the federal deficit.  (Newstips talked with Fung eight years ago about his fascinating research on local school councils and community policing in Chicago.)

“It was distressing that many left intellectuals leveled withering scorn at this event because they viewed it as a vast right-wing conspiracy to manufacture public consent to slash public programs,” Fung writes.  Progressives need to support more opportunities for public deliberation, he says.

Fung cites votes by participants in favor of raising the cap on earnings taxable for Social Security, instituting a carbon tax and a securities transaction tax, hiking payroll taxes and a 5 percent surtax on incomes over $1 million, and cutting the defense budget.

“By the end of their deliberations, it was clear that most participants wanted to reduce the deficit primarily by raising taxes and cutting defense, not by slashing Social Security, Medicaid, or Medicare.”

In fact, they did vote to slash Social Security benefits; Fung omits participants’ support for raising Social Security’s retirement age to 69, reported in a press release from America Speaks.  This would reduce benefits for everyone, and would hit low-income workers especially hard, since they don’t live as long.

They also voted to cut spending on health care and domestic programs by “at least 5 percent,” according to America Speaks.

Or did they? They seem to have actually voted against health cuts, according to Roger Hickey of the Campaign for America’s Future, also in Huffington Post.  Following the process online, Hickey says 71 percent voted for no cuts, 21 percent for 5 percent cuts.

Fung’s figures: 65 percent wanted to cut health care spending by 5 percent or not at all; America Speaks says “reforms that were preferred by participants” included “reduc[ing] spending on health care and non-defense discretionary spending by at least 5 percent.”

Thus Hickey’s call for America Speaks to provide a full report with complete voting results.

Hickey says some progressive positions emerged despite “misleading background information.”

Chief among this was the failure to identify Social Security as an independently-financed program – and the failure to ever mention the program’s huge surplus.

The Center for Economic Policy Research surveyed participants as they left the forums in four cities (including Chicago) “to determine the extent to which the process educated participants about the economy” and found that “even after this lengthy process, most of the participants were poorly informed about important aspects of the budget debate” – most notably Social Security.

Less than a third of participants surveyed were aware that Social Security trustees currently project that the program can pay all scheduled benefits for the next quarter century, according to CEPR.

CEPR notes the extremely limited options participants were provided regarding health care – with no proposals for cutting the growth of health care costs available.

Hickey looks in some depth at the organizers’ framing of Social Security, Medicare and Medicaid, and growth vs. austerity (and reports a “rebellion in the ranks” which demanded an option of voting for Medicare For All).  At Firedoglake, David Dayen looks at presentations on healthcare, Social Security, and tax increases, with a “cumulative effect [tending] towards social safety net cuts rather than tax fairness.”

Dayen reports from inside a forum in Los Angeles that “the entire event was absolutely designed to create a panic about the deficit among the participants.”  Fifteen minutes were spent on the current economic crisis and five hours on the deficit, he says, with speakers in informational videos heavily skewed toward deficit hawks.

He also has video from a protest outside the event – 40 people showed up to demand hands off Social Security, and at least some of them were among the 100 who participated in the deliberations.  MoveOn also called on members to attend and resist Social Security cuts, which may help account for some of the more progressive positions taken.

According to Ron Baiman of the Center for Tax and Budget Accountability, organizers did not keep commitments to him about including discussion of the larger economic context in their introduction to the deficit issue (see previous post).

Meanwhile, deficit hawks of the Herbert Hoover school reign in Washington and Europe, and as Paul Krugman opines, the results are potentially disastrous.

Bush Budget Would Cost Illinois $2 billion, Group Says

As President Bush campaigns for his tax cut proposal, the Fair Taxes For All Coalition says Illinois could lose $2 billion a year from tax cuts and unfunded mandates, at a time when the state faces growing deficits. “Before we institute tax cuts we need to look at how they impact programs in the state and the state’s fiscal situation,” said Amanda Eichelkraut of Citizen Action-Illinois, spokesperson for the Coalition.

Bush’s proposed elimination of the dividend tax would cost the state $132 million a year, on top of $465 million lost annually from the estate tax repeal already enacted, Eichelkraut said. And the group estimates that Bush’s 2004 budget proposal includes up to $1.5 billion in annual costs shifted to the state, including unfunded mandates for shools and special education, child care and other costs associated with increased TANF work requirements, and new Head Start mandates — including standardized testing for four-year-olds.

Meanwhile, the Center for Budget and Policy Priorities in Washington reports that under the recently-passed House budget resolution, Illinois would lose hundreds of millions of dollars over the next decade in federal funds for low-income entitlement programs, including SSI, food stamps, TANF, child nutrition, child care, and adoption assistance

Suburban Forum on Children and Federal Budget

Will domestic issues grow more important as next year’s elections approach?

Local advocates and service providers watch with alarm as federal commitments to children and communities are shunted aside in Washington’s rush to cut taxes while launching war.

In 2002, President Bush’s No Child Left Behind Act authorized $1.75 billion for afterschool programs next year. But this year Bush’s budget proposal cut afterschool funding instead, down to $600 million. That could eliminate afterschool programming for over 24,000 Illinois children, according to the Afterschool Alliance. Congress is currently considering allocations; a Sense of the House resolution recently called for maintaining afterschool funding at the current level of $1 billion.

This Monday, a suburban town hall meeting on the impact of federal budget priorities on families and children will examine prospects for child care, afterschool programs, special education and early eduation. Sponsored by Citizen Action/Illinois, Voices for Illinois Children, YWCA Child Care Resource and Referral, Center for Tax and Budget Accountability, Metropolitan Family Services, Family Shelter Service and the DuPage County Health Department, the forum is Monday, April 7, 5:30 p.m., at YWCA DuPage Center, 739 Roosevent, Glen Elyn



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