Shrink, Shift And Shaft
Chuck Collins is program director at United for a Fair
Economy and co-author, with Bill Gates Sr., of Wealth and Our
Commonwealth: Why America Should Tax Accumulated Fortunes (Beacon, 2003).
Across the land, almost every state in the union has
been plunged into its worst budget crisis since World War II.
As a result, localities are laying off teachers,
firefighters, police officers and social workers, closing libraries and
health clinics, cutting child care, mental health services, public
transit and pollution control, raising public college tuition and
reducing financial aid, letting schools, playgrounds, roads and bridges
go unrepaired. Oregon has shortened its school year by three weeks.
Tennessee is removing 200,000 residents from medical coverage, most of
whom are children. The list goes on.
At the state and local level, most communities are
facing this fiscal disaster as if were a parochial problem. The voters in
California are considering a recall of their governor because of their
ballooning budget deficit. In Portland, Maine, 26 fire fighters have been
laid off and the focus of anger is the local city council.
These dire budget straits are not natural disasters
nor accidents, but largely the result of political choices. In addition
to factors such as recession, war and increased health care spending,
many states during the 1990s gave away massive tax breaks to corporations
and the wealthy. And every state has been clobbered by federal tax and
devolution policies that have shrunk revenue to states yet increased
their responsibilities for security, education testing, health care and
social welfare.
The federal government could have sent $100 billion in
aid to the states to help them weather this period. And states could
reverse their 1990s tax giveaways. But these solutions have been blocked
by a well-organized conservative lobby that have a very different vision
for America's future.
There is a well-funded anti-tax, limited government
movement that includes national organizations such as Americans for Tax
Reform and Citizens for a Sound Economy and includes a network of state
and local limited government policy and grassroots groups. They have a
long-term strategy and program.
Over several decades, they have succeeded in changing
the terms of the debate on state and federal fiscal issues. As a result,
most states will not consider raising taxes to face their budget
deficits. Nor will the federal government provide meaningful aid to the
states to enable them to overcome these "perfect storms."
The right-wing fiscal agenda could be characterized as
"shrink, shift and shaft." And according to some of the
architects of this plan, the state budget crisis is right on schedule.
Conservative tax-slashers are now positioned to make some of their
biggest gains in decades with a "permanent tax cut" offensive
strategy.
SHRINK. The conservative movement has long had a goal
of greatly shrinking or limiting government, essentially rolling back
central elements of the New Deal and Great Society reforms, such as
college loans, homeownership programs, public health insurance and
pension programs. Budget deficits force budget cuts and thwart new
spending initiatives. Underlying this program is an ideology about the
role of government that is deeply out of step with the majority of
Americans. How else can we explain the rationale for further federal tax
cuts while our annual deficit exceeds $450 billion?
Right-wing tax cutters want to dismantle the
"opportunity state" and eliminate government programs that
broaden wealth and opportunity for all Americans. They also aspire to
weaken the elements of government that regulate corporations to protect
workers, the environment and community interests. Their vision of limited
government could be characterized as a "Watchtower State" --
with our tax dollars paying for military, police, fire and property
rights protection.
We can now look forward to a "permanent tax cut
offensive," with a long list of additional tax cuts on the agenda.
SHIFT. Central to the right-wing fiscal program is to
shift the tax burden and weaken the progressive tax system. For three
decades, the basic thrust of this agenda has been to cut taxes on wealth
and capital gains -- and shift the burden of paying for government onto
wage and consumption taxes. Hence the focus on tax cuts that primarily
benefit the rich, such as repealing the federal estate tax and cutting
dividend and capital gains taxes.
A second shift is to move tax and spending off the
federal government and onto states, where unfortunately, the tax systems
are much more regressive because of their dependence on broad-based
consumption taxes.
This is dramatized as many parents across the country
are currently receiving checks from the IRS for the expanded Child Tax
Credit. As some families are getting $400 per child checks, they are
simultaneously watching their services deteriorate, and having to pay
more in local and state fees, sales taxes and property taxes to make up
for the federal to state tax shift.
The SHAFT part of the program is obvious. But these
tax cutters are counting on the American public not to connect the dots
between local service cuts and federal budget policies.
We can now look forward to a "permanent tax cut
offensive," with a long list of additional tax cuts on the agenda.
"You'll have a tax cut each year," Grover Norquist of the
Americans for Tax Reform told The Washington Post. "I state it that
way in all of the [White House] meetings, and I never get an
argument."
The conservative strategy is to introduce a new
incremental tax cut proposal every few months. It works politically for
Republicans. "A tax cut bill a year keeps the Democrats away,"
said Kenneth Duberstein, Reagan's chief of staff. "Americans like
their changes in bite-size pieces and not in huge chunks."
Those of us concerned about public investment,
equality of opportunity, social welfare spending and other public
services are being "out-organized" by this neo-conservative
anti-tax movement. But the Fair Taxes for All coalition is tooling up to
fight future tax cuts and dramatize the connection between the federal
tax breaks for multi-millionaires and the deteriorating quality of life
at the local level.
At stake is the question of what kind of society we
want to become. Do we want to dismantle the ladder of opportunity we have
attempted to build over the last half century? Do we want to further
polarize our country along the lines of wealth and power? Ultimately,
defense of a progressive revenue system must be linked to a broader frame
and vision -- of what kind of communities and society we want to have.