For Americans attuned to politics, the Sequester captures our attention. For everyone else, it’s a nonevent.
This collective indifference is rather surprising given that the Sequester could toss our economy back into recession. Perhaps we suffer “crisis fatigue,” after Fiscal Cliff, Super Committee and Debt Ceiling. Perhaps we’ve come to terms with, and accepted, economic decline. Worst of all, perhaps ordinary Americans now view the political world as so divorced from their own that the Sequester only involves what one set of politicians does to some other politicians.
The Sequester has serious consequences for Georgians. The Pew Center reports that only two other states lose more federal funding as a percentage of state revenue. Historically, Georgia has been a net beneficiary of federal funding. Allowing the Sequester to go into effect is like tossing dollar bills into the wind.
And these are real dollars that matter to real people, Georgians from every walk of life.
Georgians care about public schools. The Sequester, according to the White House, costs our state nearly $29 million for primary and secondary education. Some 390 teachers and aides may be out of a job. We already have a hard enough time attracting new industry and jobs because of our low scores and high teacher-pupil ratios. This makes no sense for Georgians.
Georgians respect our military. The Sequester furloughs some 37,000 civilian defense employees directly supporting troops stationed here, yanking a $190 million payroll out of local economies. Army and Air bases here lose about $238 million. At a time when we have troops in harm’s way and businesses around bases shuttered, this makes no sense for Georgians.
Georgians understand no one should live in fear. The Sequester hits STOP Violence Against Women Program funding, meaning some 800 fewer Georgia victims will be served. Domestic violence hides in every neighborhood; even one more woman having to cope on her own makes no sense for Georgians.
What do we do? The Far Right says that the President has no plan to bridge the gap, but that defines “plan” in a peculiar way: the only permissible way to come up with the Sequester’s dollar figure is by cuts – cuts like the ones that make no sense for Georgians. The President instead wants a balanced approach that includes closing tax loopholes. The Right objects: not one additional dollar, no matter how ridiculous the tax loophole.
That means that the Right would rather fire teachers, endanger our troops, and leave battered women out in the cold than close a single tax loophole.
Let’s look at one of those tax loopholes. Currently, highly profitable corporations can avoid paying federal income taxes on their profits by moving these profits to off-shore tax havens, like the Cayman Islands, where the corporate tax rate is zero. As a result of this kind of corporate tax avoidance, the effective corporate tax rate for multi-billion dollar companies turns out to be significantly lower than the current federal rate of 35%. In some cases, large corporations have been able to rake in billions of dollars in profits without paying a single dime in U.S. federal income taxes. For example, Bank of America made $4.4 billion in profits in 2010 but paid nothing in federal income taxes that year. It is estimated that the U.S. Treasury loses approximately $90 billion dollars each year because of these tax loopholes for corporations.
Saying that not one tax loophole can be cut to help bridge the Sequester’s funding gap is saying that huge tax breaks for corporations is OK. It’s tough to imagine a less defensible bit of corporate welfare. And yet at the same time, we have to be honest about just how difficult it would be to close enough corporate tax loopholes to bridge the Sequester’s gap.
This brings us back to the indifference surrounding this latest crisis. We have two sides going to the mat, one to defend the indefensible, the other to raise funds insufficient to close the gap. It is easy to see how, to most Americans, this seems like one more debate that has no impact on their lives. But it isn’t just a fight over a few loopholes. Two visions for our future are in competition.
One vision talks about smaller government but consigns the tax-paying middle class to carrying burdens that the One Percent and multibillion dollar companies escape by hiring lawyers, tax accountants, lobbyists and even Congressmen. In this vision, deficit reduction tomorrow matters more than protecting a fragile economy today.
The other vision calls for a society with a strong and vibrant middle class, the kind of society in which everybody gets a fair shot and everyone pays their fair share. It promotes public investments – schools, roads, technology, public safety, consumerprotections – that make middle class life as we know it possible. In this view, deficits matter in the long run, but the top priorities of 2013 are growing the economy, reducing unemployment, and rebuilding the middle class.
Those two visions are incompatible. There’s no compromise that just splits the difference down the middle. Nothing will tell us better which vision of the future will prevail than what the Sequester does with the tax loopholes that allow the wealthiest Americans and the most profitable corporations to avoid paying their fair share.
And that’s news worth watching.
State Senator, District
5121-I State Capitol
Atlanta, GA 30334
Organizer, Georgia Fair Share
108 E. Ponce de Leon Ave. Suite 210
Decatur, GA 30030
Tel: (678) 774-9201
Cell: (626) 221-4925