budget – Page 11 – Hank Kalet

Military budget busting

I received a flier this morning from NJ Citizen Action announcing a march and vigil to take place Thursday in New Brunswick calling for the military budget to be cut by 25 percent and for that money to be used to help struggling families.

The march, which is being organized by 30 social justice groups, including NJ Citizen Action and NJ Peace Action, is timed to play off the sixth anniversary of the Iraq War to dramatize the war’s cost and the cost of the American military overall.

The vigils will take place at “seven symbolic locations” to “highlight the need to cut the military budget and increase investment in health care, housing, education, jobs, social services and infrastructure,” the release said.

“With America continuing to struggle from a deep recession, the 6th Anniversary of Iraq is the perfect opportunity to illustrate Washington’s need to shift priorities. American’s know that the security of our families does rest on wasteful military spending nor obsolete Cold War weapons – our security instead depends on Washington making real investments that will Rebuild & Renew America Now,” said Atif Malik, New Jersey Citizen Action.

I’d like to get to the vigils, but I’m kind of stuck at home this week with a couple of recuperating dogs.

‘Wham’-boozled (Plus a podcast)

CJ Radio podcast on the budget can be heard here.

We had a few friends over tonight and the talk turned to the Corzine budget and the NJ101.5 “analysis” — which comes straight from the Republican talking points — of a so-called “double-whammy” that is supposed to cost middle-class taxpayers oodles of cash.

The double-whammy — the loss of property tax rebates for families making more than $75,000 and the one-year elimination of the property tax deduction — is not something that will be easy to swallow. But it’s not the apocalyptic policy that the Republicans are making it out to be.

Consider these statements from Assembly Republicans. Assemblyman Peter Biondi, who represents Hillsborough, Manville and Montgomery, said the budget would “drive more people out of our state.”

Republicans warned that families should hold onto their pocketbooks, and we weren’t surprised by his plan. The average family would lose approximately $1000 by this budget, not counting the impact of reduced municipal aid.

Monmouth County Assemblyman Declan O’Scanlon was equally extreme:

“Property taxpayers, who yesterday heard that their property tax bills will skyrocket with cuts to municipal aid, loss of the tax deduction and elimination of rebates, have learned all too well that while the governor speaks, his tax men creep.”

And then there was Alex DeCroce, the Assembly Republican leader:

“For New Jersey taxpayers who are already saddled with the highest property taxes in the nation and are in danger of losing their homes and jobs during the worst recession in generations, Corzine’s budget is the equivalent of a knockout punch. I don’t consider anyone who would do this to families struggling trying to survive a friend of the middle class.”

Now, $1,000 is a lot of cash, but the question is whether it is enough of a hit to recreate the anti-Democrat backlash of the Florio era — especially given that most people have come to understand how bad off the state is fiscally.

That said, as Charles Stile points out in today’s Record, the chances “the Double Whammy will spark the middle-class revolt … or deliver a deadly a political blow” appear somewhat slim:

For one thing, Corzine’s rebate plan is not an across-the-board cut. It would affect about 500,000 tax filers, or 20 percent fewer than in 2008, officials said.

The program has been narrowed over the years, he says, with most of the upper-income voters having lost their rebates a long time ago. At the same time, the plan “preserves rebates for sacrosanct senior voters and his lower-middle-class Democratic base.”

The second part of the whammy — scrapping a provision that lets homeowners write off the first $10,000 of their property taxes — is also not as politically treacherous as it sounds.

Officials said Wednesday that it could cost taxpayers, on average, $219. But tax filers can still take the deduction this year on their 2008 tax returns. That means the loss of the deduction won’t be felt until they or their accountants fill out their taxes in spring 2010, which in Trenton’s political terms, is an eternity.

Does this make the plan a good one or the best one under bad circumstances? It’s too early to tell. Let the debates begin.

Nothing surprising about these responses to Corzine budget address

The responses to the governor’s budget address fell within the range of accepted opinion, with Democrats praising Jon Corzine for making tough decisions and Republicans calling him out for increasing taxes.

Here is what the GOP had to say on its site:

Jon Corzine introduced his budget proposal for the coming year and…Surprise…he wants to raise your taxes again! Our Republican legislators have drawn a line in the sand. They sent a clear message today: “We’re with the taxpayers. We’re not supporting any budget that raises any taxes on anyone. Period.”

The Corzine $1.5 billion tax hike plan:

Raise property taxes $500 million by eliminating rebates for anyone who earns over $75,000 a year.

Raise property taxes ANOTHER $400 million by eliminating the property tax deduction from NJ Income Taxes (by the way, Obama wants to eliminate the deduction from your federal tax too!)

Raise income taxes $380 million

$400 million tax hike by eliminating the property tax deduction

$80 million in increased business taxes

$48 million tax hike on cigarettes, alcohol and wine

$30 million in increased motor vehicle fees

We’re in the midst of the worst recession since World War II. Economics 101: You don’t raise taxes in a recession!

Republicans understand this and are standing strong and firm. After 7 years of tax increases (more than 100), a 50% increase in state spending, and a TRIPLING of state debt, it’s time for all of us to draw a line in the sand and say “Enough!”

Interesting take. But I have a question: Given the constitutional requirement to balance the state budget and the massive deficit created by governors of both parties — $7 billion, according to Corzine — what would the Republicans do differently? They have a list of cuts — most of which are unrealistic, or directly target New Jersey’s poorest (in the urban areas).

Former Gov. Christie Whitman made it clear that budgets are policy documents, the places where elected officials walk the walk. In this case, the GOP reform plan would cut money targeted toward municipal consolidation, urban schools, the City of Trenton (which gets money because of the revenue it loses to state buildings) and urban aid. There are positive elements in the plan — some of the process reforms make sense, though the two-thirds rule on tax increases would dangerously tie the state’s hands (states that have enacted this rule have run into massive budget problems with some overturning the rule by public referendum).

I give the state GOP credit, though. The national party has offered nothing.

As for the Democrats — they are saying what one might expect them to say, given that most of them helped created this mess in the first place. Yes, tough decisions have to be made. But is anyone prepared to make them?

All this talk is nothing more than talk. We have three and a half months to pass a budget. Does anyone really believe it will look like the one Jon Corzine unveiled today?

Bad moon on the rise

Gov. Jon S. Corzine made his budget address earlier today, slashing state spending and eradicating most budget gimmicks from the plan. it is not likely to make the unpopular governor very popular, but he deserves credit for doing this during a re-election year.

Consider the above chart, which shows that few governors have been willing to consider spending cuts — yes, Gov. Whitman did cut some departments, but shifted the money elsewhere.

This is not a perfect budget, by any means — the pension deferral is a small version of the kind of gimmicks used in the past — but it is mostly honest (as our editorial will say) and he is likely to pay for it with his job come November.

Money where his mouth is

There are times when I find Barack Obama to be a bit too pragmatic and centrist. But taking his first five weeks and placing them in context, what becomes clear is just how bold his actions have been — especially when compared with his most recent Democratic predecessor.

Not only has Obama pushed the massive stimulus package through Congress and announced a major shift in international strategy — though it is less aggressive than his campaign promised — he also has reversed a large number of Bush parting gifts, banning torture and making it clear that he believes global warming is a serious threat.

It is his budget, however, that offers the greatest example of course reversal — a shift to the left that we have not witnessed from the federal government since at least the 1960s.

In unveiling the 134-page volume that outlines his spending priorities, Obama acknowledged that his proposal would “add to our deficits in the short term to provide immediate relief to families and get our economy moving.” But he argued that the economic crisis should not be used as an excuse to delay costly investments intended to modernize the nation’s economy, enhance its workforce and, ultimately, reduce government spending.

“What I won’t do is sacrifice investments that will make America stronger, more competitive and more prosperous in the 21st century — investments that have been neglected for too long,” Obama said. Citing the need to “break free” from foreign oil, reduce “crushing health-care costs,” and improve public education, Obama said: “These investments must be America’s priorities, and that’s what they will be when I sign this budget into law.”

With its immense scope and bold prescriptions, Obama’s agenda seeks to foster a redistribution of wealth, with the government working to narrow the growing gap between rich and poor. It is likely to spark fierce political battles on an array of fronts, from social spending to energy policy to taxes.

Alice M. Rivlin, a Brookings Institution economist who served as former president Bill Clinton’s budget director, called the plan “gutsy and quite good.”

“It has a strong flavor of the Obama philosophy, which is tilting the playing field away from upper income and toward the rest of America,” she said.

Consider these elements:

It calls on lawmakers to enact major new programs across the government, including one that would establish a national infrastructure bank to prioritize federal investments and another that would set new mandates on employers to enroll millions of workers for the first time in voluntary retirement savings accounts.

The budget seeks approval of a cap-and-trade program to curb U.S. greenhouse gas emissions by 14 percent by 2020. The program, similar to one used to slash emissions that cause acid rain, would auction permits to companies that emit greenhouse gases and allow them to trade those allowances.

The administration is counting on the program to produce a big new stream of revenue, amounting to $646 billion over the next decade. About $15 billion a year would be set aside to pay for “clean energy technologies” while the rest would go toward making Obama’s signature “Making Work Pay” tax credit permanent. The tax credit, worth as much as $800 a year to low- and middle-income workers, was enacted in the stimulus package.

In what the president called an “historic commitment to comprehensive health care reform,” the budget proposes to create a $634 billion reserve fund that lawmakers could use to finance a major expansion of health coverage for the uninsured.

The fund would include savings from proposed efficiencies in Medicare and Medicaid, the federal health programs for the elderly and the poor, as well as $318 billion in new taxes on families in the highest income brackets, who would see new limits on the value of the tax breaks from itemized deductions.

That proposal is a fraction of the new taxes Obama proposes to heap on the nation’s highest earners. Individuals who earn more than $200,000 a year and families who make more than $250,000 would also lose the tax cuts enacted during the Bush administration, meaning their top income tax rate would rise to 39.6 percent from 35 percent, their investment income would be taxed at 20 percent rather than 15 percent and their deductions for mortgage interest, state and local taxes and charitable contributions would be reduced.

If Obama’s tax plan is approved, a family making $500,000 a year would see its annual tax bill rise to nearly $132,000 from about $120,000, a 10 percent increase, said Clint Stretch, managing principal of tax policy at Deloitte Tax.

Hedge fund managers would take an even bigger hit. Much of their multimillion-dollar earnings would be taxed as regular income rather than capital gains, causing their tax rate to rise from 15 percent to as much as 39.6 percent. Oil and gas companies would be asked to pay an extra $31 billion over the next 10 years through an excise tax on offshore production in the Gulf of Mexico as well as new fees for drilling on federal land. Corporations that operate overseas could expect to pay $210 billion more over the next 10 years as a result of new limits on their ability to defer taxation on foreign earnings.

The context, however, tells the story:

President Obama’s first budget — with its eye-popping $1.75 trillion deficit, a health-care fund of more than $600 billion, a $150 billion energy package and proposals to tax wealthy Americans even beyond what he talked about during his campaign — underscores the breadth of his aspiration to reverse three decades of conservative governance and use his presidency to rapidly transform the country.

But in adopting a program of such size, cost and complexity, Obama has far exceeded what other politicians might have done. As a result, he is now gambling with his own future and the success of his presidency.

William A. Galston of the Brookings Institution cited three parallels to Obama’s far-reaching program: Franklin D. Roosevelt’s 1932 New Deal blueprint, Lyndon B. Johnson’s 1965 Great Society agenda, and Ronald Reagan’s 1981 call to dramatically limit the size and power of government, which set the framework for public policy debate ever since.

“A consequence of the economic events of the last two years has been to blow up that framework,” Galston said. “It has lost substantial public credibility. President Obama now has his chance to make his case for a fundamentally different approach.”

I’ve written about a lot of budgets over the years. And while they can seem dry and unimportant beyond their impact on taxes, the fact is that budgets are blueprints for policy. It is, as former-N.J. Gov. Christie Whitman said during a budget address more than a decade ago, the place where philosphy becomes concrete action. It is government putting its money where its mouth is.

In this case, Obama’s has offered some progressive proposals and rhetoric, mixed in with some odd centrist and even conservative language. But now that it is time for him to attach a price tag to those things he believes to be most important, it is clear what his real commitments are: the environment, health care and the working and middle classes.