Puget Sound Liberals Weekly Newsletter #206
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Contents * Featured Articles Calendars of Events Communication with Our Members Appreciate
the Half-Full Glass Opportunities Petitions Commentaries from Our Members Mark Miloscia: We Must Put Public before Private Interest* Liberals and Democrats Links to the Beef Can ‘Do Nothing’ Republicans Gain Congress Members in 2010?** Congress Members Support Regulatory Reforms Is President Obama’s Tragic World View Conservative?** State and Local Links
to the Beef David Spring: More Budgetary Pain Featured Advocacy Group: Jubilee Reach Nation and World Links to the Beef John de Graaf: Do Europeans Get Too Much Vacation?* Will India Continue to Develop or Collapse?* Our Liberal Spirit Our
Christmas-New Years Holiday Mixture Our
Political Priorities ·
Fair Clean
Elections and Open Government ·
Fair Taxes and
Competent Spending ·
Investment for
Productivity ·
Quality
Health, Education, Jobs, Income ·
Environmental
Protection and Energy Independence ·
Security and
Equal Rights ·
Justice and
Peace Everywhere ·
International
Cooperation and Leadership Conservatives oppose all of these Let’s
End Our National Nightmare
Let’s
Restore Our American Dream More on Conservative opposition to our
American Dream Washington State’s 5 Major Needs · Federal Funding for Health and Education · Substituting
a Progressive Income Tax · Replacing
Conservative Legislators Quote of the Week Merry Christmas, Happy Holiday,
Happy Christmas, Merry Holiday, And New Years Too, Whatever.
Calendar of Events
Tuesday, January 5 at 7:30 PM at Seattle Town Hall
(1119 Eighth Avenue, Seattle) - David Swanson discusses his Daybreak: Undoing the Imperial Presidency
and Forming a More Perfect Union.
Saturday, January 9th at 9:30 AM - 2:30 PM
at Seattle Pacific University, Gwinn Room (3310 Sixth
Avenue West, Seattle) - 2010
Environmental Priorities Coalition Legislative Workshop. Sponsored by Washington Environmental
Council, Washington Toxics Council and other environmental organizations. $10 + $10 for lunch. To
Register.
Monday, January 18 at 8:30 AM at The Capitol Theater (206 5th Ave SE, Olympia) - Peoples Summit and March on our Capitol. To Register.
Communication
with Our Members
Appreciate the Half-Full
Glass
Many Liberals have worried about that
President Obama’s proposed reforms have been delayed and unduly
compromised. We should not ignore that
President Obama still has not suffered any major defeat. He is possibly passing as much as fast as can
occur. It is difficult to imagine who
else could have achieved as much progress on implementing crucially needed
reforms.
While our public finds legislative
sausage making difficult to understand and appreciate, I believe they will come
to appreciate the results, elect more Democrats and thus enable even more
reforms in 2011.
Opportunities
Useful
Websites: contacts, maps, community organizing tools, and more.
Petitions
Commentaries
From Our Members
Mark Miloscia: We Must Put Public before
Private Interest
Published by Seattle Times
on 12/21/2009
LIKE the Titanic after the iceberg, government budgets
and American families are sinking. The crippling conditions California faces
are just a preview of what lies ahead for Washington State. And instead of
changing course, many state leaders and policymakers are frozen at the helm,
relying on the same failing solutions to our perilous problems. Some advocate
increasing taxes and a European welfare state. Others support the cutting of
social-service programs. Still others hope for President Obama to save us with
another expensive bailout. But these solutions are akin to rearranging the
Titanic's deck chairs and do not address the fundamental root causes of our
problems and will lead to China owning us in 20 years.
The reality is this: Many in our society have embraced
a brand of Wall Street and Hollywood self-interest that is unsustainable. What
we are experiencing is not simply a recession in the economic sense, but the
result of a morally bankrupt pursuit of individualism and entitlement at home
and at work at the expense of any long-term greater good. Many of us have
turned our backs on institutions like marriage, faith communities, worker
unions and service clubs that were once the linchpins of personal and community
prosperity. We increasingly expect, if not demand, that taxes cover our
mistakes and instead turn to foolish celebrities who dominate radio, TV, Wall
Street and Hollywood for "wisdom" and policy solutions.
This trade-off has been a calamity. Wall Street
failures, high unemployment and poverty jobs combined with soaring numbers of
single-parent and hurting families are causing massive government shortfalls. A
$9 billion state budget shortfall last spring, $4 billion next session, and a
$4 billion gap in 2011 will gut our education and human-service systems. Each
year, fewer people marry and more single-parent families need government
services to survive.
Each year, more workers are hurt as poverty jobs
replace middle-class jobs that are outsourced to low-wage states or countries
to satisfy Wall Street profits and bonuses. In the next decade, our high-tech
jobs will follow manufacturing out of state. Improving one's wages with
education won't help much when most new jobs require little education. The
Washington State Job Vacancy Survey reports that 40 percent of vacant jobs pay
less than $10 per hour. That means many new workers will be working for peanuts
and needing government services to survive.
We have done better. Seventy-five years ago, the
Greatest Generation and leaders like Martin Luther King Jr. soon afterward
challenged us. Leaders from the faith, labor, business, political and education
communities passed laws that demanded responsibility and sacrifice from all.
They sacrificed, some with their lives, to insure all survived their
generation's crisis and then prospered.
We can do better!
·
Change must start with a values shift — one person, group and politician
at a time. Our leaders imitate our values and priorities. Until we demand
sacrifice and accountability in our public and personal lives, they will
continue to fall short.
·
Second, the Legislature must adopt the Greatest Generation strategy by
increasing principled unionization and slowly raising the minimum wage by
linking its growth to income growth so that all workers benefit.
·
Lastly, we must promote family responsibility and prosperity by
increasing marriages and stable families. If the marriage rate today were the
same as in 1970, poverty would drop by 30 percent and state budgets and taxes
would be much smaller.
Christmas is a time for reflection and a new
commitment to love one another. We must stop living like Wall Street and
Hollywood and focus again on what is important and just. Prosperity and true happiness only occurs through responsibility and
sacrifice for one's family, neighbors and community. This is how the
Greatest Generation survived their crises; it is the only way we will survive
ours. With God's help, we'll do better! Mark Miloscia, 30th Legislative District
Representative
Liberals
and Democrats
Government Watch
Also go to Whitehouse.gov.
Reducing Government Waste and Corruption
New
contracting rules have saved $19 billion.
Health Care Reform
Senate Majority
Leader Harry Reid has created a
bill which 60 senators will support cloture to stop it from being
filibustered. Contrary to Republican
claims, the senate
health care reform bill offers many benefits beginning in 1910. President Obama’s Saturday
address stressed that the senate reform bill offers the benefits that have
been contained in patient’s bill of rights proposals. For
more. For more. Thanks to
Senator Bernie Sanders, the proposed bill also includes money
for community health centers which will provide primary care for 25 million
more Americans. To meet shortage of
primary care physicians to serve 30 million newly insured Americans, the
health care reform bill includes $1.5 billion to add 15,000 residencies. More are Needed.
On
Monday Morning, our senate passed cloture, so that its health care reform bill
will pass this week. Instead of the
house passing the same bill, a conference committee will merge the house and
senate bills to include components of the house bill that senators will accept.
Hypocritical Republicans attacked
Democratic tactics to pass the Senate health reform bill even though they used
the same tactics when they were in control to pass such legislation as the
Medicare Part D prescription drug bill. The Week includes the following
comments:
Scaring seniors
into believing they’re about to lose their benefits is one of the oldest, if
most shameless, games in politics, said USA Today in an editorial. But
in their desperation to stop President Obama’s health-care reform initiative,
the Republicans have “set a new, lower bar for demagoguery.” Arizona Sen. John
McCain led the fear-mongering last week when he tried, unsuccessfully, to
remove $487 billion in Medicare cuts from the Senate health-care bill. His
insistence that the cuts would “eventually lead to rationing of health care”
was echoed by Sen. Tom Coburn of Oklahoma, who warned the elderly, “You’re
going to die sooner.”
That’s as
untrue as it is irresponsible, said Jonathan Cohn in The New Republic
Online. The reductions constitute only about 5 percent of Medicare’s budget
over the next 10 years, with no guaranteed benefits being lost. As for their
newfound concern for Medicare, Republicans have apparently forgotten that in
the 1990s, they proposed 12 percent cuts in the program to free up money
for tax cuts for the rich. Hypocrisy, anyone?
When it comes to hypocrisy, said The Washington Times, Democrats
shouldn’t point fingers. The White House would have you believe that the huge
cuts now being considered would somehow “strengthen Medicare” by magically
reducing waste and fraud, without specifying what waste and fraud would be
eliminated. But the Centers for Medicare and Medicaid Services, which is
jointly run by Congress and the administration, recently demolished that
argument. If the cuts pass, the agency said in tangled bureaucratic language
that we’ll put into plain English here, “people will want more medical care
than will be available; not everyone will be able to get treatment; and there
will have to be rationing.”
Consider the alternative—no cuts in Medicare, ever, said Paul Krugman in The
New York Times. The U.S. is rapidly racing toward a major debt crisis,
caused mainly by the ever-escalating cost of the big three entitlement
programs—Social Security, Medicaid, and Medicare. With tens of millions of baby
boomers now beginning to retire, the cost-control measures in the Senate
health-care bill are an important first step in heading off “fiscal
catastrophe.” Only by guaranteeing health care to everyone can the government
create enough political support to tackle out-of-control costs. If health-care
reform fails, “the demagogues will have won.” Then, neither party will dare to
cut entitlements until the federal government is bankrupt.
Regulating Mountaintop Mining Toxic Waste
In spite of promises, our EPA has failed to
eliminate the toxic waste threats posed by mountaintop mining.
Jobs
States are using up
their funds for unemployment compensation.
Washington
Democratic Senator Patty Murray’s has introduced a bill (The Main Street
Lending Restoration Act) that will direct $30 billion in unused Troubled Asset
Relief Program (TARP) funding to community banks to help rid them of impaired
real estate assets that are restricting their ability to lend, and in some
cases, endangering their overall viability. “Community banks have a major role
to play in helping to create jobs and grow small businesses in their neighborhoods,”
said Senator Murray. “But they’ve been handcuffed by the economic
downturn. Instead of opening up the lending window to local businesses, they’ve
been forced to lock up the vault.
“This
legislation will get at the root cause of the problem by removing impaired
loans from the books of community banks. This will help to expand community
bank’s capacity to lend again, improve investor confidence, and enhance their
ability to raise new capital. It will also help local businesses get the loans
they need to expand and create jobs.”
Many
community banks have impaired real estate-related assets on their books that
stem from the collapse of the housing and commercial real estate markets and
the overall economic recession. Because of these troubled assets, community
banks have struggled to raise new capital and have had to cut back lending to
small businesses and families in their communities because they anticipate they
will need additional capital to cover against future losses on those assets.
This has meant that banks can’t provide small businesses – our nation’s largest
jobs creators - with loans to sustain day-to-day operations, grow and hire
workers.
Under
Senator Murray’s bill, $30 billion in TARP funding would be authorized to
remove impaired loans from their balance sheets of community banks under the
U.S. Department of Treasury’s Public-Private
Investment Program (PPIP) for Legacy Loans. Removing impaired assets will
help strengthen community banks and free up much of the capital that banks are
setting aside to protect against future losses so that it can be used today to
provide start-up loans, operating lines of credit, and capital for businesses
to expand and create local jobs.
“The
legislation introduced by Senator Murray could have a dramatic positive impact
on community banks,” said John Collins, President and CEO, Community Bankers of
Washington. “This legislation will free up dollars to be put back into the
small business community to create jobs and stimulate the economy. Community
banks have in the past and will continue in the future to be the stimulus to
create jobs in the small business arena. We are thankful for the efforts
Senator Murray and her staff have put into this legislation. Senator Murray
understands the need to assist community banks to better serve and help
stimulate their local communities.” “We
appreciate Sen. Murray’s recognition of the great challenges facing community
banks and applaud her efforts to find creative solutions, such as contained in
this bill, to help address these problems,” said Jim Pishue, President and
CEO, Washington Bankers Association.
Small,
community banks – those banks that have under $10 billion in total assets -
constitute more than 90 percent of all banks nationwide. About 50 percent of
all small-business loans under $100,000 and 30 percent of loans under $1
million are made by community banks.
Can ‘Do Nothing’ Republicans Gain Congress Members in 2010?
Once again the
commercial media pundits are misleading us.
They report that many voters are unhappy with Congressional action on
health reform and other issues. They
assume that these unhappy voters will vote for Republicans against Democrats
who are nominally in control.
What these
pundits fail to report is that many of the disgruntled voters want more reform,
not less. These voters who want more
reform won’t vote for Republicans who just say no to reform. Remember Harry Truman’s 1948 victory in which
he ran against the ‘Do Nothing’ Republican congress. Besides the election of President Truman, Democrats
gained enough senate and house seats to take control of both congressional bodies.
Democrats gained 9 senate seats, 1 open seat and 8 seats held by previously by incumbent Republicans. The number of Democratic senate seats
increased from 45 to 54. The number of
Republican senate seats decreased from 51 to 42. Remember that there were only 96 seats before
the admission of Alaska and Hawaii as states.
Democrats also gained 75 house seats. The number of Democratic house
seats increased from 188 to 263. The
number of Republican house seats decreased from 246 to 171.
In addition the
tea bag republicans may defeat various less consistently Conservative
Republicans, such that Democrats win, as occurred in upstate New York.
Democrats will
obviously run against Republican congress members who just say no to
stimulating jobs, to health care reform, to greenhouse gas reform, to
regulation of Wall Street speculators who collapsed our economy, not to mention
other reforms. I believe that Democrats
will gain enough congressional seats in 2010 that they can easily invoke
cloture against Republican attempts to filibuster to stop reforms. If so, Democrats
could pass a second health care reform, which would go beyond the one being
passed now to include a public option and other measures to reduce health care
costs, particularly those resulting from uncompetitive private insurers and
pharmaceuticals. Such a second health
care reform bill would benefit from a year or more experience with the one
being passed now. For
another commentator’s view that Democrats will win more congressional seats in
2010. A commentator notes that as
the 1964 Civil Rights Bill paved the way for the 1965 Voting Rights Bill, this
health care reform bill can pave the way for a second improved health care
reform bill. Dave Thomas
Congress Members Support Regulatory Reforms
Our house
passed financial
regulatory reforms which exceed those proposed by Obama Administration,
whose staff mostly includes speculative financial bank alumni. Washington Senator Maria
Cantwell and Senator John McCain introduced legislation similar to the
Glass-Steagall Act which prohibits commercial banks from speculating. These regulatory reforms are fueled by voter
discontent with bailing out Wall Street speculators instead of stopping them
from speculating.
Is President Obama’s Tragic World View Conservative?
Following Reinhold Niebuhr, President Obama’s Nobel
Prize acceptance speech expressed the
view that our world is a tragedy because our ideals can not be fully realized. In a commentary,
Conservative Andrew Sullivan notes that Obama’s speech included,
“We will not eradicate violent conflict in our
lifetimes. There will be times when nations -- acting individually or in
concert -- will find the use of force not only necessary but morally
justified... For make no mistake: Evil does exist in the world. A
non-violent movement could not have halted Hitler's armies. Negotiations
cannot convince al Qaeda's leaders to lay down their arms. To say that
force may sometimes be necessary is not a call to cynicism -- it is recognition
of history; the imperfections of man and the limits of reason.”
Sullivan concludes that President Obama is a
Conservative.
When I
have been asked why I, as a conservative, support this man the way I do, I can
only answer: listen to him. What is the philosophy that most affirms "the
imperfections of man and the limits of reason"? What philosophy sadly
demurs when told that peace is possible on earth, that history is leading to
utopia, that war is over, that "freedom is on the march"? And this is
the critical distinction between Bush and Obama: Obama is far more
conservative than his predecessor.
He
sees that the profound flaws in human nature affect us as well as them;
that we "face
the world as it is," not as we would like it to be; that the decision
to go to war is a moral and a pragmatic one; that ends have to be
balanced by a shrewd and sometimes cold-eyed assessment of means. For peace to
exist, there must sometimes be war. A statesman will sometimes have to bargain
with evil men. A statesman will also sometimes have to let evil flourish
because he simply does not have the proportionate means to counter it. Human
nature is alloyed between good and evil, and evil often wins. Hope is not
optimism. We have little reason for optimism given the first decade of the
twenty-first century. Hope is a choice. As much a choice as faith and
love.
I
asked Obama in the campaign about some of this. Here's a
response worth recalling from more than two years ago:
Barack
Obama: You know, reading Niebuhr, or Tillich or folks like that—those are the
people that sustain me. What I believe in is overcoming - but not eliminating -
doubt and questioning. I don't believe in an easy path to salvation. For myself
or for the world. I think that it’s hard work, being moral. It's hard work
being ethical. And I think that it requires a series of judgments and choices
that we make every single day. And part of what I want to do as president is
open up a conversation in which we are honestly considering our obligations -
towards each other. And obligations towards the world. “
Andrew
Sullivan: But you don't think we're ever going to be saved on this earth do
you?
Barack
Obama: No. I think it's a ... we're a constant work in progress. I think God
put us here with the intention that we break a sweat trying to be a little better
than we were yesterday.
"A
little better than we were yesterday." Whatever that is, it is not utopian
or liberal except in the deepest, Niebuhrian sense. Obama has never been a
pacifist. Never. His opposition to the Iraq war, as he said at the time, was
not because he was against all war, but because he was against a dumb war. He
is, in so many ways, a Niebuhrian realist. And with Niebuhr, there is the
deeper sense that even though there is no ultimate resolution in favor of good
over evil on this earth in our lifetimes, we still have a duty to try.
It is this effort in the full knowledge of ultimate failure on earth that is
the moral calling. It is to do what we can, knowing that it will never be
enough.
Andrew Sullivan
is wrong to believe that Niebuhrian realism is Conservative. Liberals do not reject realism. We do not assume that the world is without
tragedy. What separates us from Conservatives
is that we don’t believe we should simply give in to tragedy. We believe we must find responses to tragic
situations which reduce the tragedy as must possible. On this issue, President Obama is a
Liberal. Dave Thomas
Here’s the Beef
Commercial media pundits keep saying that voters are
dissatisfied with President Obama’s proposed reforms, without noting that voters
are even more dissatisfied with Republican ‘Do nothing’ alternatives.
State
and Local
David Spring: More Budgetary Pain
OFM Four Year Budget Plan
is also based on a V-shaped recovery
The
following quote was in today’s Seattle Times: The consensus of five economists surveyed by Arizona State University's
Blue Chip Economic Forecaster is that even if growth resumes at some point next
year, Washington payroll jobs will still
shrink 0.2 percent in 2010 versus 2009. Thus,
at least five economists now support what I have been saying for the past year,
that there will not be significant job
growth in Washington State in 2010. To me, this also means there will not
be any significant growth in State income or State revenue in 2010 because
folks who aren’t working cannot buy things and cannot pay taxes.
In
past reviews of the ERFC revenue forecasts, I have concluded that the true
budget shortfall will be between $4 to $5 billion (or much more than the $2.6
billion estimated by the ERFC). I predicted that the ERFC will have to revise
revenue downward significantly in their February 18, 2010 Revenue Forecast.
Because the OFM 4 Year Budget Forecast is based on the ERFC Revenue Forecast, I
also disagree with its projections. In
particular, I disagree with the assumption used by OFM that there will be a
4.8% to 10% rate of growth during the next 4 years. Instead, the shape of the
current recession thus far supports a deep and prolonged period of economic
stagnation with no growth at all for several years:
Note
that the 5% decline in jobs is based on the U-3 unemployment rate rising from
about 5% to about 10%. The U 3 rate is dreadfully inaccurate. For example, in
the last quarter, the number of employed workers in Washington State fell by
35,000. Yet the unemployment rate also fell to 9.2%. The reason this happened
is because so many real people had lost their unemployment benefits and were no
longer on the unemployment roles, that the U-3 rate fell even though the number
of unemployed went up by at least 35,000. So the actual decline in jobs is more
accurately reflected in the U-6
unemployment rate which is at about 17%.
Thus, while the State
claims there are 321,000 people unemployed and looking for work in Washington
State right now (based on the U-3 rate of 9.2%), it is likely that we have more than 593,000 unemployed workers (based
on a U-6 rate of 17%). The graph below
does appear to have hit bottom in the past 30 days, but there is no evidence to
support any kind of rise much less a rapid V-shaped recovery. Revenue will not
go up until income goes up. And income will not go up until employment goes up.
Artificial drops in the U 3 rate will not help improve revenue as long as
employment keeps declining. Thus, a 4.8% to 10% rise in revenue, as assumed by
ERFC and OFM is not likely.
“State
Revenue Collected since 1981 averages 4.8% growth per year” Inflation Adjusted
GFS Biennial Revenue (in Billions)
There
are several problems with basing the State forecast on a 4.8% rise to predict
future revenue:
Here
are the revenue estimates for the next four years based on ERFC assumptions:
The
revenue numbers in this table looked wrong to me. The revenue appeared to be
rising at a rate much greater than 4.8%. So I calculated the actual rate of
increase being used:
Four Year
Outlook for the State’s General Fund (Dollars in Billions)
|
Revenue
|
2010 |
2011 |
09-
11 |
2012 |
2013 |
11-13 |
|
Nov
2009 forecast |
13.7 |
15.1 |
28.8 |
15.8 |
16.6 |
32.4 |
|
$
increase over prior year |
1.4
B |
1.4
B |
2.8
B |
0.7 |
0.9 |
1.6 |
|
Annual % increase |
10% |
10% |
10% |
5% |
5% |
5% |
So
while ERFC and OFM claim that their revenue predictions were based on a 4.8%
rate of growth, their predictions are actually based on a 10% rate of growth for the next two years (to catch up to the 30
year trend line) followed by a 5% rate of growth for 2012 and 2013. Thus, ERFC
and OFM are predicting a V-shaped
recovery in revenue shown below:
“State
Revenue Collected since 1981 averages 4.8% growth per year”
Inflation
Adjusted GFS Biennial Revenue (in Billions)
The
graph on the first page makes it clear that such a rapid V-shaped recovery as
depicted on the above graph is unlikely. It is much more likely that there will
be a prolonged period of unemployment with stagnant income and therefore
stagnant State revenue.
But
the biggest problem with using the above chart to base the 4-year budget on is
that it is simply the wrong chart for predicting revenue. The above chart makes
it seem as if State revenue has been rising for the past 30 years. This is a
mathematical illusion. In fact, the following chart shows that State revenue, as a percent of income, has
been falling at a rate of 1% a year for at least the past 12 years:
Washington State &
Local Taxes as % of Income (OFM Washington Trends)
http://www.ofm.wa.gov/trends/tables/fig505.asp
This decline in State
revenue, as a percent of income, over time is due to the accelerating pace of
tax breaks for major corporations and millionaires (now at about $50 billion
dollars per year and rising at a rate of $3 billion dollars per year). Thus, if
employment remains flat, and income remains flat, future State revenue will
actually decline due to the accelerating effect of tax breaks. But even
thinking optimistically, State revenue will not rise for at least the next few
years because employment will not rise (at least not without significant tax
reform). In fact, if the Governor’s Supplemental budget becomes law, there will
be a rapid reduction in employment and an associated decline in State
revenue.
So the next question is what State revenue will be like if there is
zero percent growth instead of 4.8% growth?
Four-Year Outlook for the State General Fund (dollars
in Billions)
|
Revenue |
2010 |
2011 |
2009-2011 |
2012 |
2013 |
2011-2013 |
|
If 4.8% growth |
13.7 |
15.1 |
28.8 |
15.8 |
16.6 |
32.4 |
|
If 0.0% growth |
13.4 |
13.4 |
26.8 |
13.4 |
13.4 |
26.8 |
|
Difference |
0.3 B |
1.7 B |
2.0 B |
2.4 B |
3.2 B |
5.6 B |
The OFM 2010 and 2011
estimates are based on ERFC assumption of a 5% to 10% rate of growth and an
associated estimate of a $2.6 billion shortfall. In my prior analysis, I
provided evidence that the actual shortfall for these two budget years will be
about $2 billion more than ERFC has predicted for 2009 to 2011. I am predicting
a budget shortfall of $4.5 billion dollars. Most of the difference is in 2011
($1.7 B) because the ERFC is predicting a rapid V-Shaped Recovery and I am
predicting either a prolonged U-shaped recovery or no recovery at all.
Thus, if I am right, there
will be a $4 to $5 billion shortfall within the next year followed by a $5 to
$6 billion shortfall in the 2011 to 2013 biennium. The total difference just from the assumption of a 4.8% to 10% growth
rate compared to a zero percent growth rate is about $10 billion dollars over
the next 16 quarters (or more than $600,000 million per quarter. Combined
with the $8 billion dollars in over-estimation of revenue that the ERFC has
already been off during the past 9 quarters,
if I am right about zero percent growth, the ERFC will be off by a total of $18 billion dollars over 24 consecutive
quarters.
Even my estimates are
based on the assumption that the unemployment picture does not get any worse.
If employment continues to fall, then State revenue will fall even lower.
Obviously, the one thing that will shore up the ERFC estimate is if employment
rises rapidly in the coming year or two. But this will not happen unless there
is significant tax reform as described in Option #3 below.
What will the 4-year budget actually look like?
The answer depends a lot
on what the 2010 legislature does.
Option #1: A Fair Tax Reform Package is NOT passed in the 2010 session
The Governor’s
supplemental budget calls another $1.6 billion in cuts with about a billion in
one-time accounting tricks. These cuts, if they occur would result in the lost
of at least 40,000 more jobs and including domino effects could translate into the loss of 100,000 more jobs.
This obviously would
further compound the economic disaster in our State and lead to a death spiral
with further unemployment leading to further losses in revenue leading to
further budget cuts until the patient finally dies. Thankfully, Governor
Gregoire has stated she does not support her supplemental budget and is willing
to consider revenue options. However, if the revenue options are merely more
band-aids, or even worse involve tax increases on our middle class, the revenue
options could do more harm to the economy that good.
In addition, the 2010
session is a short session, meaning it will be difficult to get anything
passed. Republicans are not likely to be very helpful in passing Fair Tax Reform
and I am uncertain that Democrats will be able to pass tax reform. I have
spoken to legislators who are also uncertain if there are enough votes. But
what is certain is that if tax reform is
not passed, a special session will be required later in 2010 to deal with the
extra $2 billion in revenue shortfalls. These $2 billion in additional cuts
will cause the loss of yet another 100,000 jobs. Thus, our State economy will
go into a tail spin by 2011 and State revenue will continue declining sharply.
Option #2: A small Tax Reform Package will be passed, but it will not be
adequate
Another possible option is
that a $1 to $2 billion dollar revenue package will be passed – focusing solely
on restoring the most harmful cuts in the supplemental budget – but not
addressing the $3 billion in cuts in the 2009 budget, or the additional $2
billion in cuts coming due to over-estimation of revenue by ERFC or the
additional $5 billion in cuts coming in 2011 to 2013 as a result of the loss of
temporary federal stimulus funds and associated problems. Because the actual
problem is about $5 to $6 billion per biennium, $1 to $2 billion will not
address the shortfall.
Option #3: A substantial Tax Reform Package of $3 to $4 billion per year
is passed. It will have to be at least $4 to $5 billion per
biennium just to maintain the current level of stagnant employment. To actually
improve the employment picture will take at least $6 to $8 billion in
additional revenue per biennium.
Conclusion
There is a substantial
difference in revenue between assuming a 4.8% to 10% growth rate versus
assuming a zero percent growth rate. The difference is about $4 to $5 billion
per biennium.
The solution to this
problem is not to pretend that there will be a rapid recovery. Instead, it is
to make millionaires pay their fair share of State taxes. Every year that we delay passing fair tax reform costs our State at
least $2 billion dollars.
Given that the average tax
rate in our State is now at 11.2%, and that millionaires are paying less than
3%, it is certain that our middle class is paying at least 14% of their income
in State and local taxes. This compares to a national average of about 11%.
Thus, a fair tax structure is one in which taxes on our poor and middle class
would be reduced, while taxes on millionaires would TRIPLE to at least 10 to
11%. Such a “fair tax” high earners
income tax would generate at least $2 billion per year and go a long way
towards resolving the budget shortfall without cutting employment or raising
taxes on our middle class.
The fate of our economy as
well as the future of one million children and three million workers is in the
hands of the 2010 legislature. If the legislature fails to pass a significant
tax form package in 2010, rolling back tax breaks for major corporations and/or
requiring millionaires to pay their fair share of State taxes, then our schools
and our economy will bear the consequences. Regards, David Spring, Fair School Funding
Coalition
Featured Advocacy Group
----------------------------------- Jubilee Reach---------------------------------------
Jubilee Reach is
not a political advocacy group. It
offers a variety of services, which together constitute an experimental
demonstration project of ways to better serve community needs. With caution, new services have been
continually added. It is easy to imagine
that it could assist such relevant services as micro lending, health care
clinics and energy conservation audits.
We
could easily advocate that every community have a sensitive and responsive
community group similar to Jubilee Reach.
-------------------------------------------------------------------------------------------------------------------
Here’s the Beef
Alpine Lakes Wilderness Area
Passes Key Senate Committee
Nation
and World
John de Graaf: Do Europeans Get Too Much
Vacation?
In all honesty,
my visits to Europe have made me very jealous of European holiday time. I have
yet to talk to a European who wishes to see his or her vacation time reduced.
This does not mean they want to see American vacations extended: I recall
meeting a man from London in California's Yosemite National Park two summers
ago. When I asked if he thought Americans got too little vacation, he quickly
responded, "Oh, no! After all, I get five weeks off and I can come to this
beautiful place and it's not even that crowded because the Americans are all
chained to their bloody desks. I’d be having less fun if they had more
vacation."
But this is not
an argument about preference. The long holidays that Europeans take are
justified, not simply because they enjoy those holidays, but because their
access to holiday time brings benefits for their health, their family
connections, their environment, their overall life satisfaction and even their
hourly productivity.
Let us start
with health. Vacation time is a hedge against coronary disease. Indeed, men who
do not take regular vacations are some 32% more likely to suffer heart attacks
than those who do, while for women the figure is even higher, at 50%. Women who
do not take regular vacations are also two or three times more likely to suffer
from depression than those who do. Dr Sarah Speck, a Seattle cardiologist,
calls workplace stress “the new tobacco”. She suggests that taking regular
blocks of time away from work may be nearly as good for your health as stopping
smoking.
It is thus
perhaps no accident that nearly all western European countries can boast longer
life expectancies than the United States (while spending half as much on health
care), or that a Los Angeles Times story reported that Europeans are
only a little over half as likely as Americans to suffer from such chronic
illnesses as heart disease and high blood pressure in old age. Meanwhile,
Americans are also about twice as likely to suffer from depression and anxiety.
All together, these infirmities account for a lion’s share of the enormous
health-care costs borne by Americans.
Further
evidence for the positive impact of shorter working time, including vacation
time, on health comes from new findings that American health has actually
improved during the recession (while many workers have received extended
furloughs), and that the shorter working hours associated with recessions
regularly lead to health improvements, while periods of rapid economic growth are
associated with poorer health outcomes. Moreover, a recent Greek study found
that around the world, mortality rates are at their lowest in the periods of
the year immediately after most people in a given country take their vacations.
In simple terms, rather than being an economic drain, vacations may
significantly decrease unproductive expenditures associated with poor health.
Vacations also
improve family life and the welfare of children. Researchers have documented
the degree to which many of children's strongest memories are of their
vacations with their families. Vacations help bond families and often
reintroduce romance into the lives of parents. They have even been shown to
improve children's academic performance. Extended holiday time allows for more
tourism—a benefit to many national economies—which, as a travel specialist,
Rick Steves, points out, helps increase international understanding and
connection, vital in these times of worldwide distrust.
Moreover,
lengthy periods of time off improve life satisfaction. As even Forbes magazine
pointed out, annual Gallup Polls have found the highest rates of happiness in
such countries as Denmark, Finland, the Netherlands (with the world's shortest
working hours) and Sweden, nations where attention is paid to work-life balance
and of course where holiday time is lengthy. And psychologists such as Tim
Kasser and Leaf Van Boven have found that for most citizens of the industrial
North, time affluence, including ample vacation time, brings more long-term satisfaction
than material affluence does.
Those who
oppose long European vacations often do so in the name of greater economic
growth. But ever higher growth rates are not sustainable in the long run.
According to the Global Footprint Network, Americans, with their emphasis on
material consumption rather than time off, have roughly twice the environmental
impact of Europeans. A study by CEPR, a Washington DC think-tank, found that by
reducing their working hours to European levels, including European-length holidays,
Americans would cut their energy use and carbon outputs by 20-30%.
Even so,
extended periods of time off such as Europeans enjoy are not a threat to
productivity. In fact, an Air New Zealand study found that after two weeks off,
workers experienced an extra hour of quality sleep each night and showed 30-40%
faster reaction times on the job. A recent Harvard Business School study found
that in one large company, workers who experimented with predictable and
required time off actually produced more than their colleagues who worked
longer hours. Their work was more focused and the quality of their
communication with fellow workers improved dramatically.
Yet even if
they produced a bit less, the tradeoff would be worth it. Many of the great
joys in life cannot be measured by the crude index of GDP, as even Nicolas
Sarkozy has recently noted. Europeans have a high quality of life (as so many
Americans observe) precisely because they take time to live, time for
conversation, for good food and wine, for travel at bicycle speed, time for
family and time for long and memorable holidays. They are right in not wanting
to sacrifice these non-material joys for the stuff extra hours of work can buy.
People in the United States have much to learn from them. And they might even
want to consider taking longer holidays.
Will India Continue to Develop or Collapse?
Most commentators are impressed with the economic development occurring
in China and India. I believe that what they fail to understand is that China’s
economic development is sustainable, India’s economic growth is not.
China’s economic development involves 80% or more of its people and its
economic policies seek to involve all of its people. China’s government has the ability to put its
public interests before its private ones.
So it can implement economic development that would be blocked by more
Democratic processes. China has limited its population increases. If China cannot grow enough food for its
population, its development provides to money to import what is needed.
India’s economic development involves 20% of its people, with little
attempt to involve the great majority of rural subsistence farmers. India’s attempts to upgrade its
infrastructure are continually blocked by private interests. Most important, India’s population is rapidly
increasing.
As global warming proceeds, India is losing much water necessary to
agriculture and does not have the money to import food at higher prices. India’s increasing population (most of them
poor) will face a food crisis that China can control. I believe that India is an enormous disaster
waiting to occur. Dave Thomas
Here’s the Beef
China
is spending $600 billion to upgrade its electrical grid. We are spending $8 billion.
Developed countries are
using one-sided fair trade agreements to environmentally and financially harm
less developed countries, which react to oppose restrictions on their
greenhouse gas emissions. To stop
damaging our environment, we must stop prioritizing
capitalist profits.
Our
Liberal Spirit
Our Christmas-New Years Holiday Mixture
Our Christmas and New Years holidays
are a mixture of:
·
a religious
celebration of the birth of Jesus Christ
·
a children’s
Santa Claus drama, with children being rewarded with stuff for being good
·
a secular
commercial consumption practice which plays a large role in stimulating our
economy and harming our environment
·
debauched
celebrations which risk our health.
While the first component is
exclusive to Christians, the others can be viewed as generally open to
everyone. The latter two are incompatible
in spirit with the first two. It is no
wonder that this mixture produces different reactions and controversies.
We would do well to eliminate
the last two components and the rewarding of children with stuff is also
questionable. We need to produce an
economic mindset and practice which doesn’t depend upon consumption of
products, especially wasteful consumption that results when the products given
are often not products which the recipient prefers.
Even in the unlikely event
that we can eliminate the last two components, we would still have a mixture of
a general secular and a specific Christian component, rendering it difficult to
determine the support than our government should give to our holiday. However, we might be able to have our government
support Santa Claus without supporting nativity scenes and other aspects of
Christian celebration of the birth of Christ.
Recommended Books – See our list of books for liberals
Benjamin Friedman, 2005, The
Moral Consequences of Economic Growth
Benjamin Friedman claims that economic growth (particularly
increasing middle class incomes) causes political democratization, while
economic stagnation causes intolerance. To stimulate increased middle class
incomes, he recommends more investment in physical and human capital. When
economic stagnation occurs, we can easily imagine that people feel too poor to
be charitable. During our recent periods of economic stagnation, we have
certainly experienced intolerance against Blacks, women, gays and
immigrants. But we have also seen
attitudes toward these groups becoming Liberal much more rapidly than occurred
earlier with respect to Blacks and women, especially among young people who are
the most affected by our economic stagnation.
We have elected a Black president, more states are allowing gay
marriage, and immigrant bashing is rapidly declining.
During
periods of economic stagnation, people can also feel an urgency to work with
others to adopt reforms. Great reform efforts were mounted during the
Progressive Era of the 1870s through the 1910s, again during the 1930s and
again since 2006. Some groups can act
for reform while others act intolerantly to blame minorities.
It can
be argued that when Liberals are in control, they encourage investment which
produces a growing economy. Then as
people forget their earlier economic stagnation, Conservatives obtain control,
quit investing, encourage consumption instead and produce a stagnant
economy. Conservatives thus kill the
goose that lays the gold egg. Then
reform minded Liberals obtain control again to continue the cycle of changing
political control and investment.
Internationally,
since the end of the Cold War, many dictators have lost their U.S. supporter
and have been replaced by Liberal leadership, which has implemented economic
growth policies. Here again, Liberal
leadership has preceded economic growth instead of vice versa. Since 1978, China’s leadership has stimulated
economic growth, which has not in turn led to increased political
democratization.
Comparing
our U.S. with most other countries, we legally grant corporations the same
rights as persons, in spite of their much greater power and their much reduced
bottom line of special interests. The
result is an almost unique form of corruption which is oriented to shaping
public policy to stop political and economic reforms. To achieve political and economic reforms, I
would argue that we must eliminate our corporate corruption through public
campaign financing and other measures.
We
must then change our mindset and practices from Borrow, Consume and Speculate to Earn, Conserve and Invest. Unlike following World War II, our Earn,
Conserve and Invest economy must be publically managed instead of managed by a
coalition of big business and labor. And
our economy must shift from shifting much of our consumption from products to
services, with much higher pay for service workers. Our economy can still grown, but without
dependence on consumption of environmentally damaging products.
My
views agree with Friedman’s views in supporting investment, but differ from his
in supporting a strong safety net.
Instead of viewing spending on a safety net as providing people a financial
floor, he views safety net measures as competitors for funds which should be
invested. Friedman describes the history
of legal reactions to unionization, but doesn’t indicate any support for
unionization and other measures to increase earnings. He notes that consumption can be
environmentally harmful, but doesn’t suggest that we shift our much of our
consumption from products to services and conserve what products we do use.
In summary, my view not only explains economic growth or stagnation as resulting from Liberal or Conservative political leadership. My view also presents an understanding of the mindset and practices which we should adopt for the future. Most other commentators present no such vision for the future and thus no clear strategies for realizing such a vision. It is not enough to know what has gone wrong and why, we must also know what to do. Dave Thomas