****
THE VIEW FROM JOHN MCHUGH
"A CAUTIONARY TALE"
****
George W. Bush Tax Cuts Favored The Rich
New Jersey is in significant financial trouble. It has been underfunding its pension system for years and has “re-directed” unemployment and other benefit funds. It has been lying about the enormity of this debt for years. It is a cautionary tale.
The infrastructure and services we all depend on to support our standard of living cost money and the bill must be paid. It should be paid in proportion to the financial benefits an individual gains from that structure.
While both New Jersey Democrats and Republicans have dipped into these pension and benefit funds, the trend started in 1997 during the Whitman administration. She took over a State which, according to Governor Florio, who had wanted to raise taxes, was bankrupt. He was right. But the taxpayers shot the messenger and elected Whitman who was preaching the still popular no new tax promise made popular by the Republicans. Indeed, they are still advocating reducing taxes despite looming deficits.
Governor Whitman adopted the Beam Shuffle, moving money around, raiding pension funds and liquidating state assets to keep from running out of cash. She even got to surpluses held by public authorities such as the Turnpike, and, of course the the ultimate cost cutter, she cut State funding for mandated programs, transferring the cost from the State to local governments, governments financed by property taxes, the most regressive of all taxes.
Having set the "no tax increase" trend all followed including Corzine who while making some inroads on the state debt problems offered as an answer, sell some toll roads and to use the proceeds of the sale to cover some of the State’s debts.
The only way out of the hole New Jersey is in and indeed the nation is in is to use the graduated income tax and the inheritance tax. These tax systems tax surplus funds paid to our over compensated few, funds well in excess of their needs or of any value added by them to society, funds which will not be spent and therefore cannot be reached with any type of sales tax. Our current tax system, combined with capital’s ability to freely move jobs overseas, which has ended pay increases for nearly twenty years despite marked increases in employee efficiency, is allowing huge accumulations of money in the hands of 1% of the population. This is rendering them too powerful and is effectively taking that money out of circulation. With no tariffs to keep work within our boarders, with no effective unions and an increasingly regressive tax system with crushes the middle class, the golden goose is getting very sick indeed.
The problem is that we are caught between Republicans who wish to continue on the road to ruin and Democrats who do not have the courage to change direction. The breaks Democrats timidly seek to put on our decline into insolvency when they are in power are not working too well and are immediately released when the Republican’s return. Remember Bush took over with tax revenue adequate to pay down our debts. His tax cuts which grossly favored that richest 1%, converted that surplus to the huge deficits Republicans now blame the Democrats for.
The money needed to balance the budgets of the State and the Nation resides in the portfolios of the richest 1%. It is not that this nation does not have the funds to pay its bills; it is that we have excused the folks who make the most off our society from the obligation to pay for the rewards they receive. Where would they be today if we did not bail out Wall Street? Who profits directly from the bail out of Wall Street, teachers, policemen, firemen, nurses, garbage men, I think not.
Alexis de Tocqueville predicted in 1820 that the American experiment in democracy would continue only until the people decided not to tax themselves to support their society. With the Reagan Revolution that process started nationally, an infection he brought to Washington from California. Things began to crumble under Bush the second and the current administration has not addressed the underlying problem effectively. If the Bush era tax cuts continue to exempt the richest 1% from their proportional responsibility to support this nation, de Tocqueville's prediction will be fully tested.
Photo By: RD/Leon/Retna
