It now appears that, beginning March 1, Republican resistance to the President’s strategy for getting our economic house in order could well take our economy on a painful toboggan ride.
We can avoid this dangerous slide – but only if the will of the American people makes itself felt on Capitol Hill.
On March 1, the devastating, across-the-board cuts in government spending (the “sequester” enacted in 2011 to avoid the Republicans’ threat to America’s “full faith and credit”) are scheduled to begin.
Unless a prompt alterative is approved, at least $85 billion will be slashed from federal expenditures this fiscal year. Except for Social Security recipients, Medicare patients, the disabled and our men and women in uniform, nearly every American will be affected.
Nearly 100,000 jobs could be lost as a result in Maryland alone.
The “sequester,” however, is only the first of three major collisions that we must overcome this year if we are to avoid the downward slide that threatens our economy and our way of life.
By March 27, our President and the Congress must reach agreement on a continuing resolution to fund the federal government. Our failure to meet this second challenge could shut down the federal government.
The impact of this second potential blow on most Americans might be deferred until August, but, sooner rather than later, it would be felt in almost every household.
Finally, the short-term “fix” that we just enacted to defer our fight over raising the federal debt limit runs its course on or about May 19. According to most experts, the consequences of the United States’ reneging on the obligations that we already have incurred are almost too dire to contemplate.
It is important to emphasize that our nation is facing these three tests in the coming days – not just one – and to understand the deepening consequences of failure.
Failing the first test, the sequester, could cost our nation 700,000 jobs and slow our continued growth out of the Bush recession. Failing the second, the threatened government shutdown, could push us back into recession.
Failing the third test, on the U.S. government’s full faith and credit, could well lead to a prolonged depression that would harm every American, as well as our world.
When I speak of every American being seriously harmed, I include those moderately conservative and relatively affluent Republicans nationwide who have the most persuasive influence with the Republicans whom they have elected.
To them, and to all of us, I suggest that they take another look at the balanced solutions to our budgetary cul-de-sac that President Obama and congressional Democrats have proposed.
As a starting point, we Democrats agree with Republicans that our long-term budgetary shortfalls cannot be sustained. We also agree that many government programs can be made more efficient, if we do so carefully – and that some can and should be eliminated.
Where we do not yet agree is how to bridge the gap between the cost of necessary expenditures such as spending on defense, social security, public health and education and the revenues that our current tax system provides.
So, stripped of all the political posturing, the budgetary issues come down to a straightforward question: “Who can and should pay a little more to avoid our economic crisis?”
Affordability for taxpayers is the single, unavoidable fact that we must address in balancing the federal budget.
We simply cannot avoid the fact that everyday Americans who rely totally upon salaries, wages or Social Security and pensions for their livelihood cannot afford to pay significantly more in taxes than they do today.
We should reexamine the huge subsidies that our tax code currently provides to Big Oil and other industries.
Nor should we dismiss the reality that the stock markets have demonstrated substantial growth since the Bush recession – growth that has been affected, but only modestly, by the preferred income tax treatment we afford to dividends and capital gains compared to taxes upon wages and salaries.
As a result, according to the conclusions of a respected Congressional Research Service expert, Thomas Hungerford, “The single greatest driver of income inequality over a recent 15 year period was runaway income from capital gains and dividends.”
These gains in income and wealth, according to Mr. Hungerford in a Feb. 20 interview with Greg Sargent of the Washington Post, account for most of the rising income of the top one percent.
If we are to successfully bridge the gap between government revenues and expenditures, we must reexamine that preferred tax treatment for this most fortunate one percent.
Balance in our budget can only be achieved by more balance in our system of taxation. This is the core principle that our budget negotiations must enforce.
The alternative is economic disaster for us all.
Congressman Elijah Cummings represents Maryland’s seventh congressional district in the House of Representatives.