The Coming Shutdowns

By Robert Reich, Robert Reich's Blog

21 February 11

The Coming Shutdowns and Showdowns: What's really at stake.

isconsin is in a showdown. Washington is headed for a government shutdown.

Wisconsin Governor Scott Walker won't budge. He insists on delivering a knockout blow to public unions in his state (except for those, like the police, who supported his election).

In DC, House Republicans won't budge on the $61 billion cut they pushed through last week, saying they'll okay a temporary resolution to keep things running in Washington beyond March 4 only if it includes many of their steep cuts - among which are several that the middle class and poor depend on.

Republicans say "we've" been spending too much, and they're determined to end the spending with a scorched-earth policies in the states (Republican governors in Ohio, Indiana, and New Jersey are reading similar plans to decimate public unions) and shutdowns in Washington.

There's no doubt that government budgets are in trouble. The big lie is that the reason is excessive spending.

Public budgets are in trouble because revenues plummeted over the last two years of the Great Recession.

They're also in trouble because of tax giveaways to the rich.

Before Wisconsin's budget went bust, Governor Walker signed $117 million in corporate tax breaks. Wisconsin's immediate budge shortfall is $137 million. That's his pretext for socking it to Wisconsin's public unions.

Nationally, you remember, Republicans demanded and received an extension of the Bush tax cuts for the rich. They've made it clear they're intent on extending them for the next ten years, at a cost of $900 billion. They've also led the way on cutting the estate tax, and on protecting Wall Street private equity and hedge-fund managers whose earnings are taxed at the capital gains rate of 15 percent. And the last thing they'd tolerate is an increase in the top marginal tax rate on the super-rich.

Meanwhile, of course, more and more of the nation's income and wealth has been concentrating at the top. In the late 1970s, the top 1 percent got 9 percent of total income. Now it gets more than 20 percent.

So the problem isn't that "we've" been spending too much. It's that most Americans have been getting a steadily smaller share of the nation's total income.

At the same time, the super-rich have been contributing a steadily-declining share of their own incomes in taxes to support what the nation needs - both at the federal and at the state levels.

The coming showdowns and shutdowns must not mask what's going on. Democrats should make sure the public understands what's really at stake.

Yes, of course, wasteful and unnecessary spending should be cut. That means much of the defense budget, along with agricultural subsidies and other forms of corporate welfare.

But America is the richest nation in the world, and "we've" never been richer. There's no reason for us to turn on our teachers, our unionized workers, our poor and needy, and our elderly. The notion that "we" can no longer afford it is claptrap.

Robert Reich is Professor of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. He has written twelve books, including "The Work of Nations," "Locked in the Cabinet," "Supercapitalism" and his latest book, "AFTERSHOCK: The Next Economy and America's Future." His 'Marketplace' commentaries can be found on publicradio.com and iTunes.