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The coming shutdowns and showdowns: What’s really at stake

Robert Reich, professor of public policy | February 23, 2011

Wisconsin is in a showdown. Washington is headed for a government shutdown.

Wisconsin Governor Scott Walker won’t budge. He insists on delivering a knockout blow to public unions in his state (except for those, like the police, who supported his election).

In DC, House Republicans won’t budge on the $61 billion cut they pushed through last week, saying they’ll okay a temporary resolution to keep things running in Washington beyond March 4 only if it includes many of their steep cuts — among which are several that the middle class and poor depend on.

Republicans say “we’ve” been spending too much, and they’re determined to end the spending with a scorched-earth policies in the states (Republican governors in Ohio, Indiana, and New Jersey are reading similar plans to decimate public unions) and shutdowns in Washington.

There’s no doubt that government budgets are in trouble. The big lie is that the reason is excessive spending.

Public budgets are in trouble because revenues plummeted over the last two years of the Great Recession.

They’re also in trouble because of tax giveaways to the rich.

Before Wisconsin’s budget went bust, Governor Walker signed $117 million in corporate tax breaks. Wisconsin’s immediate budge shortfall is $137 million. That’s his pretext for socking it to Wisconsin’s public unions.

Nationally, you remember, Republicans demanded and received an extension of the Bush tax cuts for the rich. They’ve made it clear they’re intent on extending them for the next ten years, at a cost of $900 billion. They’ve also led the way on cutting the estate tax, and on protecting Wall Street private equity and hedge-fund managers whose earnings are taxed at the capital gains rate of 15 percent. And the last thing they’d tolerate is an increase in the top marginal tax rate on the super-rich.

Meanwhile, of course, more and more of the nation’s income and wealth has been concentrating at the top. In the late 1970s, the top 1 percent got 9 percent of total income. Now it gets more than 20 percent.

So the problem isn’t that “we’ve” been spending too much. It’s that most Americans have been getting a steadily smaller share of the nation’s total income.

At the same time, the super-rich have been contributing a steadily-declining share of their own incomes in taxes to support what the nation needs — both at the federal and at the state levels.

The coming showdowns and shutdowns must not mask what’s going on. Democrats should make sure the public understands what’s really at stake.

Yes, of course, wasteful and unnecessary spending should be cut. That means much of the defense budget, along with agricultural subsidies and other forms of corporate welfare.

But America is the richest nation in the world, and “we’ve” never been richer. There’s no reason for us to turn on our teachers, our unionized workers, our poor and needy, and our elderly. The notion that “we” can no longer afford it is claptrap.

Cross-posted from Robert Reich’s blog.

Comments to “The coming shutdowns and showdowns: What’s really at stake

  1. They’re also in trouble because of [ Leftist Obama’s] tax giveaways to the rich [ and the international banks, and his Wall Street CEOs buddies]

    There fixed the facts for you.

    16 Years in office; a leftist; F.D.R. = 14% unemployment, that is a fail.

    Carter reached 20% unemployment, got rejected for re election.

    Obama is at 10% umemployment, and gives money to wealthy international capitalist leftists.

  2. Dear Prof Reich,
    Thank you on behalf of my family and friends who are on the front line in Madison Wisconsin. They are with thousands of hard working individuals who are employed in both the private and public sector, they support the Unions retaining the power of negotation.

    Governor Walker is only setting the stage, if he successfully breaks the unions, everyone’s jobs are in jeopardy.

    Although, I have lived in California for many years, I still remember the kind, honest and hard working people of Wisconsin.

  3. I don’t think the Republicans (or the super-rich they protect) will budge one millimeter until they are on the run politically. I don’t know what will turn the tide, but too many of us seem to think this will just get better on its own.

  4. Thank you Prof Reich for bringing attention to Wisconsin’s struggle, it was in the news for a few days, but it has quietly disappeared.

    Family members whose lives are impacted by the GOP antics have been at the State Capital all most everyday, along with thousands of workers from both private and public sectors.

    They are aware, that if Walker bust the Unions-negotiating power, then no one’s job will be safe – whether they are working for the State or a privately held company.

  5. Is it conceivable that this will change any time soon? For it to change, the public has to be made aware of the nature of the problem – who’s going to do that? The Democrats seem to prefer fighting Republicans within their own paradigm, the media only cares about the $, not about some public duty to divulge unnoticed truths… who’s left? The few people that do speak out in mainstream media are branded as far-left whackos, and handily marginalized. Activists are similarly marginalized.

    The only choices seem to be to live with the system, or move out. How many of us would happily vote someone in that would restore the progressive tax structure? Who is that person? People running on that platform are dubbed “unelectable”, and it’s a self-fulfilling prophecy.

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