GOP Policies Cause Louisiana to Falls into Budget Crisis

The blog has looked at the economic disaster that the implementation of "true conservative" policies under Gov. Brownback and Republicans brought to Kansas.  Less mentioned is what similar policies under Bobby Jindal brought to Louisiana.  What is particularly frightening is that the failed policies implemented in Kansas and Louisiana are almost virtually the same as those being espoused by every one of the Republican presidential candidates save Donald Trump who has yet to lay out in any detail what he would seek to do.  Stated another way, the GOP presidential candidates want to bring economic and budget disasters nationwide as they once again espouse voodoo economics and trickle down economics that have twice devastated the U.S. economy and budget deficit. Bill Clinton and Barack Obama had to undo the budget wreckage wrought by Reagan and Chimperator George W. Bush.  A piece in the Washington Post looks at the Louisiana disaster which ought to send off alarm bells for anyone contemplating voting Republican in November.  Here are highlights:

Already, the state of Louisiana had gutted university spending and depleted its rainy-day funds. It had cut 30,000 employees and furloughed others. It had slashed the number of child services staffers, including those devoted to foster family recruitment, and young abuse victims for the first time were spending nights at government offices.

And then, the state’s new governor, John Bel Edwards (D), came on TV and said the worst was yet to come..

Edwards, in a prime-time address on Feb. 11, said he’d learned of “devastating facts” about the extent of the state’s budget shortfall and said that Louisiana was plunging into a “historic fiscal crisis.” Despite all the cuts of the previous years, the nation’s second-poorest state still needed nearly $3 billion — almost $650 per person — just to maintain its regular services over the next 16 months. Edwards  gave the state’s lawmakers three weeks to figure out a solution,

Louisiana stands at the brink of economic disaster. Without sharp and painful tax increases in the coming weeks, the government will cease to offer many of its vital services, including education opportunities and certain programs for the needy. A few universities will shut down and declare bankruptcy. Graduations will be canceled. Students will lose scholarships. Select hospitals will close. Patients will lose funding for treatment of disabilities. Some reports of child abuse will go un-investigated.

But even if Louisiana’s Republican-dominated legislature approves certain tax increases, as most expect, the state still would grapple with problems. The taxes — which could include hikes on everything from groceries to salaries — would dig into the pockets of citizens in a state where 18 percent live in poverty and where the median income is 20 percent below the national average. 

Many of the state’s economic analysts say a structural budget deficit emerged and then grew under former governor Bobby Jindal, who, during his eight years in office, reduced the state’s revenue by offering tax breaks to the middle class and wealthy. He also created new subsidies aimed at luring and keeping businesses. Those policies, state data show, didn’t deliver the desired economic growth. This year, Louisiana has doled out $210 million more to corporations in the form of credits and subsidies than it has collected from them in taxes.

The math is daunting: For the fiscal year that ends June 30, Louisiana is facing a $940 million deficit, roughly one-eighth of what the state typically doles out from its general fund in a year. For 2016-2017, which begins July 1, the gap is $2 billion.

On Jindal’s watch, nearly every agency in Louisiana shed employees, and state lawmakers say some teetered because of the losses. The Department of Children and Family Services shrank to 3,400 employees, from 5,000 in 2008, and social workers began carrying caseloads larger than national standards. The state also cut funding for youth services and mental health treatment.

In recent days, lawmakers have zeroed in on a plan that would somewhat narrow the deficit for the rest of this fiscal year but barely make a dent in the $2 billion gap for next year. Lawmakers would raise sales and cigarette taxes while dipping further into a rainy-day fund. They would also use settlement funds from BP, the company responsible for a 2010 oil spill in the Gulf of Mexico. Still, massive cuts would still be required for hospitals and universities.

Since the 2007-08 school year, Louisiana has cut funding for higher education by 44 percent, the sharpest pullback in the nation; Southern has seen its funding cut 49 percent. During that time, the burden of supporting education has flipped: Whereas the state once provided 70 percent of the money its schools spent, now the students support the bulk of the costs — in the form of higher tuition.

A popular “TOPS” scholarship fund — available to anybody in the state with a 20 ACT score and a 2.5 GPA — is depleted. Some students will lose their scholarships, and for a future batch of high schoolers, the fund will be unavailable. Belton said that many students were taking out new loans to deal with the rising tuition or stressing about how they would remain enrolled.

“We’re trying to provide for a middle class in America,” he said. “And to compromise that mission compromises the promise for the state.”

Republicans, despite lip service to the contrary, do not give a damn about America's middle class or average workers.  Rather, corporate welfare and tax cuts for the wealthy are the only real agenda.  Take a good look at Kansas and Louisiana - this could be all of America if the GOP wins the White House and retains control of Congress.

Hillary Vows Hundreds of Billions for Infrastructure, Jobs

If one travels around western Europe and America one difference that you will likely see is that Europe's infrastructure is not crumbling and falling apart. Back in May when in Paris, we saw none of the dilapidated and/or totally inadequate roads and highways that are all to prevalent in America.  And don't even get me started on the sad state of America's passenger rail system.  Recognizing the need to rebuild America's infrastructure - once the envy of the world - Hillary Clinton has proposed hundreds of billions of dollars in infrastructure spending.  Not only would this improve a transportation system in dire need of improvement among other things, but it would generate lots of jobs.  Yes, this would require a change in the tax structure and higher taxes for some, but the alternative is an ever more third world infrastructure in large parts of the nation.  Here are highlights of Hillary's proposals:

Hillary Rodham Clinton unveiled the first piece of a new jobs agenda on Sunday, promising hundreds of billions of dollars in fresh federal spending in an effort to compete with the liberal economic policies of her primary challengers.

Her initial proposal, a $275 billion infrastructure plan, falls short of the $1 trillion pledged by Vermont Sen. Bernie Sanders to rebuild the nation’s crumbling bridges, ports, highways and airports. But it marks an effort by Clinton to fulfill her party’s desire to use national programs to boost the middle class without alienating independent voters more concerned with increasing the federal deficit.

Already Clinton has proposed an array of new federal programs, including a $350 billion college affordability plan. Other new policies, like universal pre-K, combating substance abuse and expanding family leave, could add hundreds of billions in spending.

Clinton aides say her economic initiatives will be the most expensive of her campaign and plan to roll out proposals for new investments in manufacturing and research in the coming weeks. On Sunday, she added a pledge to give all American households access to high-speed Internet by 2020.

So far, she’s offered few specifics about how she’d fund her plans. Her campaign said that her infrastructure proposal would be paid for by closing corporate tax loopholes but didn’t detail which breaks would be targeted.

Yes, there would be tax increases.  But is it really right or fare that General Electric and many other large corporations pay no income tax?   In Hampton Roads we are strangling economically because the transportation system is so inadequate.  Some days traveling roughly 30 miles to the law firm's Virginia Beach office can take 1.5 to 2 hours due to gridlocked traffic.

The Real "Takers" in America

The Republican Party and conservative pundits blather incessantly that welfare and social safety net programs breed a culture of dependence and distort the work ethic of the poor.  But they have no problem with welfare for the very wealthy which, they no doubt justify as stimulating the economy - as if spending by the poor on food and clothing and other necessities doesn't stimulate the economy.  An op-ed in the New York Times looks at the hypocrisy of the GOP and they "welfare programs" with which they have no problem.  Here are column excerpts:

In the debate about poverty, critics argue that government assistance saps initiative and is unaffordable. After exploring the issue, I must concede that the critics have a point. Here are five public welfare programs that are wasteful and turning us into a nation of “takers.”

 

First, welfare subsidies for private planes. The United States offers three kinds of subsidies to tycoons with private jets: accelerated tax write-offs, avoidance of personal taxes on the benefit by claiming that private aircraft are for security, and use of air traffic control paid for by chumps flying commercial.  As the leftists in the George W. Bush administration put it when they tried unsuccessfully to end this last boondoggle: “The family of four taking a budget vacation is subsidizing the C.E.O.’s flying on a corporate jet.”

Second, welfare subsidies for yachts. The mortgage-interest deduction was meant to encourage a home-owning middle class. But it has been extended to provide subsidies for beach homes and even yachts.  In the meantime, money was slashed last year from the public housing program for America’s neediest. Hmm. How about if we house the homeless in these publicly supported yachts?

 

Third, welfare subsidies for hedge funds and private equity. The single most outrageous tax loophole in America is for “carried interest,” allowing people with the highest earnings to pay paltry taxes. They can magically reclassify their earned income as capital gains, because that carries a lower tax rate (a maximum of 23.8 percent this year, compared with a maximum of 39.6 percent for earned income).

Fourth, welfare subsidies for America’s biggest banks. The too-big-to-fail banks in the United States borrow money unusually cheaply because of an implicit government promise to rescue them. Bloomberg View calculated last year that this amounts to a taxpayer subsidy of $83 billion to our 10 biggest banks annually.  President Obama has proposed a bank tax to curb this subsidy, and this year a top Republican lawmaker, Dave Camp, endorsed the idea as well. Big banks are lobbying like crazy to keep their subsidy.

Fifth, large welfare subsidies for American corporations from cities, counties and states. A bit more than a year ago, Louise Story of The New York Times tallied more than $80 billion a year in subsidies to companies, mostly as incentives to operate locally.

You see where I’m going. We talk about the unsustainability of government benefit programs and the deleterious effects these can have on human behavior, and these are real issues. Well-meaning programs for supporting single moms can create perverse incentives not to marry, or aid meant for a needy child may be misused to buy drugs. Let’s acknowledge that helping people is a complex, uncertain and imperfect struggle.

But, perhaps because we now have the wealthiest Congress in history, the first in which a majority of members are millionaires, we have a one-sided discussion demanding cuts only in public assistance to the poor, while ignoring public assistance to the rich. And a one-sided discussion leads to a one-sided and myopic policy.

We’re cutting one kind of subsidized food — food stamps — at a time when Gallup finds that almost one-fifth of American families struggled in 2013 to afford food. Meanwhile, we ignore more than $12 billion annually in tax subsidies for corporate meals and entertainment.

Every time an executive wines and dines a hot date on the corporate dime, the average taxpayer helps foot the bill.  So let’s get real. To stem abuses, the first target shouldn’t be those avaricious infants in nutrition programs but tycoons in their subsidized Gulfstreams.

However imperfectly, subsidies for the poor do actually reduce hunger, ease suffering and create opportunity, while subsidies for the rich result in more private jets and yachts. Would we rather subsidize opportunity or yachts? Which kind of subsidies deserve more scrutiny?