An Adult Conversation on Budgets, Revenue, and Deficits

Suppose you told your kids that they could have what they wanted, without having to pay anything or otherwise earn it?

What would you get? Spoiled brats.

The kind of kids you see running up and down the aisle on airplanes screaming their lungs out; the kind you see in grocery stores, demanding - and getting - the latest choco-sugar-white flower-mutant chemical concoction masquerading as breakfast cereal. The kind who drive a Mercedes to high school, have flat-screen TVs in their bedrooms, and graduate believing the world owes them a living.

The kind of kid who grows up and takes the "civil" out of civilization.

Something very much like the average American Taxpayer.

Ever since Reagan, people have been told that by cutting taxes we'd increase revenue. You can have your cake and eat it too. All you have to do is close your eyes, click your heels three times, and mumble supply-side; supply side; supply side. Throw in a dash of magic market dust, and bingo! Everything you want and need will be trickle down to you.

No need for those nasty taxes. Roads will pave themselves; fires will go out on their own; kids will teach themselves; criminals will turn themselves in; corporations will protect the environment; and your old age needs will be covered - all without pain, planning or funding. How? Maybe the vaunted private market will do it. But it'll happen, don't you worry, 'cause Saint Ronny said it would.

Stir in some typical adolescent attitude about how incompetent adults are - substituting government for adults - and you've pretty much got those kids in the airplane aisle trying to function as citizens.

The thing is, citizens who believe everything they want or need will be given to them free of charge, that government doesn't need money and that it doesn't deliver anything of value anyway aren't in the real world.

Conservatives and pundits like to talk about having an "adult conversation" when it comes to the budget - meaning being willing to "talk tough" about budget cuts. But the reality is, politicians are either like cowed parents of a tyrannical adolescent - having spoiled the kid rotten, they'll do anything to avoid confronting him or her with reality - or intent upon eviscerating government on behalf of their plutocratic bosses.

What's so adult about that?

Here's the real adult truth taxpayers need to know: We have been keeping government - especially state and local governments - afloat using a series of accounting tricks that amount to little more than budgetary legerdemain that literally takes money out of the hands of future generations to preserve the huge tax cuts we've given to the rich. Yes, having soaked the middle and lower wage earners of their wealth, politicians are now ripping off our kids, both born and unborn so that the wealthiest 1% get to upsize their yachts or buy their fourth vacation home in Barbados.

Oh yeah, that's an adult conversation all right.

But reality is immune to propaganda; impervious to punditry. The truth is, the game's up; the gimmicks are played out; the seed corn is just about eaten.

In his excellent book, Griftopia, Matt Taibbi outlines the desperate measures state and local governments are taking to keep government afloat and avoid confronting the spoiled brats.

The poster child for selling out our future to cover today's shortfalls has to be the Chicago parking meter deal, in which Mayor Daley struck a devil's bargain to lease out all of the city's parking meters for seventy-five years for a $1.565 billion dollar lump sum, without any consultation or notice. Problem is, the revenue from the meters was worth about a $1 billion more than what Chicago got. In short, to cover a hole in the budget, they sold out the city's future. And what's worse, they didn't have to. They could have used the revenue as collateral for a low interest bond - but that would look too much like a tax.

As Taibbi points out, many cities are following Chicago's lead. Nashville Pittsburgh, New York and Hartford are now considering or have considered such a deal. LA nixed a plan by the Mayor to do it, when neighborhood activists and local businesses forced Council Members to run the numbers.

But it's not just parking meters. The list of assets sold at bargain basement prices includes the Chicago Skyway, a stretch of toll road in Florida, even an entire Port. Ed Rendell tried to lease the Pennsylvania Turnpike - one of the country's earliest super highways. And guess who's buying? Sovereign Wealth Funds, mostly with wealth from petro-dollars. Oh, and it probably won't surprise you that Goldman Sachs, JP Morgan and their ilk are brokering the deals and walking away with sweet fees today, in addition to a generous portion of our children's future wealth.

The truth is, US citizens pay less in taxes than almost any other developed nation, (and that includes state and local as well as federal taxes) and we squander much of that on a Defense Budget that is a national disgrace.

The truth is, if we were even moderately serious about deficits, we'd be talking revenue increases as well as tax cuts. In fact, most cities are pretty much played out when it comes to tax cuts, unless you want pay-as-you go fire fighters, untrained police forces, low quality teachers, and vehicle-eating potholes. And no, public employees are not lavishly compensated - in fact they earn less than private sector workers do for comparable jobs. Lowering their already low pay would make it impossible to hire qualified people.

At the Federal level, an "adult conversation" would recognize that cutting funding during this jobs crisis is insane. With the private sector sitting on $2 trillion in profits waiting for demand to increase, we can't look for economic stimulus there. States and cities are broke. Where do the budget hawks think the demand our economy so desperately needs will come from, if not the federal government?

Cutting the deficit isn't as hard as these "adults" pretend. On the revenue side, get rid of the tax cuts for those making over $250,000; create three more brackets for those making over $1 million, $ 5 million and $ 10 million; adopt a financial transactions tax; restore the inheritance tax; restore short term capital gains to pre-Bush levels and eliminate the corporate tax break given to corporations that go offshore. That nets about $500 billion. Now - cut Defense by $120 billion for starters. Get the hell out of Afghanistan and Iraq (another $170 billion) cut agricultural subsidies to big agribusiness (about $10-15 billion). That's over $800 billion off the deficit, and it leaves money on the table to repair our economy.

That's an "adult conversation." What's going on in Washington and in the state capitals right now is a second-rate garage band's cover of "Money for Nothin' and Chicks for Free." Dire Straights indeed.