Tuesday, February 22, 2011

Poor, Middle Class To Pay For Tax Breaks For Rich, Corporations

Think Progress: State budgets across the country are in disarray as a weak economy, the end of tens of billions in Recovery Act funds, and a GOP-led House that is pushing for deep cuts to many programs that benefit state and local governments set the stage for massive in shortfalls over the next two years.

These misplaced priorities mean that the poor and middle class will shoulder the burden of fiscal austerity, even as the rich and corporations are asked to contribute even less. Here’s a detailed look at how the GOP’s war on the poor and middle class is playing out at the state level:
Texas: As ThinkProgress has reported, Gov. Perry spent the last two years traveling around the country attacking the stimulus and other Obama administration initiatives, all while touting the “Texas Miracle” (low taxes, low services, and low regulations). However, as Matt Yglesias noted, “It looks like the secret behind Texas’ ability to avoid the kind of budget woes that afflicted so many states last year was two-year budgeting rather than the miracle of low-tax, low-service, lax-regulation policies.” Moreover, Perry relied more on the stimulus than any other state to fill his 2010 budget gap, with stimulus funds plugging a full 97 percent of the gap.

In facing down a $25 billion budget crisis on par with that of California, Perry categorically rejected any tax increases. Texas, as Paul Krugman said, already takes a “hard, you might say brutal, line toward its most vulnerable citizens,” as indicated by its poor educational performance and sky-high 25 percent child poverty rate. Still, Perry also refuses to use any of the $9.4 billion in the state’s rainy day fund (some of which, ironically, comes from stimulus funds intended to help states stave off draconian cuts that Perry instead squirreled away) and is instead contemplating deep cuts to child services programs and education, among other things. Perry even floated a plan to drop Medicaid entirely. Perry’s proposed education cuts are so deep that they prompted an unlikely source to take to the pages of the Houston Chronicle to write in opposition to them — none other than former First Lady Laura Bush. Bond ratings agency Standard & Poors has also weighed in, saying Texas’ cuts-only approach “won’t solve the state’s long-term fiscal problems” and that revenue increases need to be considered alongside the deep cuts being proposed.

: Gov. Scott Walker first gained national headlines for joining Ohio’s Kasich in a future-losing decision to cancel an $800 million investment — fully paid for the by the federal government — in high-speed rail. This decision prompted train manufacturer Talgo to announce it was leaving the state and will likely cost the state thousands of jobs.

Walker is of course now famous for his high-stakes war against Wisconsin’s workers. Walker has used a very small short-term shortfall and larger shortfall to come (which is still smaller than shortfalls the state has faced in recent years) to move forward with an unpopular plan to destroy the state’s public employee unions. As Ezra Klein and many others have noted, Wisconsin’s unions aren’t to blame for the state’s budget problems and taking away their collective bargaining rights will have no impact on the state’s fiscal situation.

Indeed, the unions offered to concede to all of Walker’s financial demands, so long as they could retain their collective bargaining rights. Walker balked at this offer, betraying his true motive: busting unions. Walker is also late in offering his budget, but it is believed that in spite of the supposed “crisis” and being “broke,” as Walker himself has said, his budget plans will include “a LOT more tax breaks” for the rich and corporations that will have to be balanced on the backs of workers or with painful cuts to state services and the state’s Medicaid programs, BadgerCare. It’s also worth noting that the last time Scott Walker went union busting, it turned into a massive boondoggle when he was overruled by an arbiter, wasting hundreds of thousands of taxpayers dollars in the process. When Republican governors speak of “shared sacrifice,” it seems that the only thing they mean is sacrifices by the poor and middle class in order to fund massive tax breaks for the rich and corporations.
Read the complete story @ Think Progress

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