The United States can be fiscally responsible and meet the urgent necessities of the American people by stopping corporate welfare to concentrated industries, taxing the wealthiest that  profited from three decades of tax breaks and reigning in weapons and war spending.  Expanding Medicare to cover all Americans will save money and improve health.  And, Social Security is essential to most Americans and is a contract between the government and the people that should not be broken.

Solving America’s fiscal problems requires reviewing the priorities of government, its spending and the sources of funds.  It is an opportunity to re-make government so that it meets the necessities of Americans in a cost-effective way while stopping taxpayer subsidies to concentrated corporate interests and finding new sources of more equitable government funding.

Before considering cuts to Social Security and Medicare, the country’s most important social programs that every American will rely on for their health and well being, this Commission should focus on where wealth is concentrated as well as cuts in discretionary spending.  To do so means confronting the true sources of U.S. debt: two wars on borrowed money, uncontrolled military spending, hundreds of billions in corporate welfare,  tax cuts for the wealthiest and corporations as well as deregulation of banks that led to the financial collapse that destroyed vast wealth and required massive bailouts.

The vast majority of the income gains in the United States over the last three decades have gone to the richest 5% of the population with the greatest gains in the top 0.5%. This funneling of wealth to the top came as a result of policies that were explicitly designed to redistribute income upwards.  In fact, during the economic expansion from 2002-2007 the top 1% captured two-thirds of income growth.  Now, the top 1% has 70% of the wealth of the nation.  To balance the budget, the Commission needs to go where the money is.  As a result, it is far more appropriate to tax the richest that have prospered rather than the broad middle class which have suffered.

The funneling of wealth to the top has been due to tax payer subsidies, tax breaks and corporate welfare to concentrated corporate interests and tax breaks for the wealthiest Americans. This is a major source of the national debt. From 2001-2008, tax cuts for the wealthy cost the U.S. Treasury $700 billion, all adding to the national debt.  This Commission should be looking to those who have profited from government policies – policies that have been a major source of fiscal problems you are facing – as a source for bringing the federal budget under control.

There are 7,500 households in the United States with annual incomes over $20 million. Over the last two and a half decades, this is the group that has profited from a tax system designed to favor the wealthiest. America’s highest earners – the top 400 – have seen their share of income paid in federal income tax plummet from 51.2% in 1955 to 16.6% in 2007, the most recent year with top 400 statistics available. Congress should boost the top tax rate to 50% on annual incomes over $5 million and to 70% on incomes over $10 million. This would generate an additional $105 billion, going a long way toward getting our fiscal house in order.

One hundred years ago, President Theodore Roosevelt urged Congress to address the concentration of wealth by instituting a “graduated inheritance tax.” The failure to retain any estate tax during 2010 will cost an estimated $14.8 billion in revenue losses. This Commission should endorse the Responsible Estate Tax Act (S.3533) which was introduced by Sens. Bernard Sanders (I-VT), Sherrod Brown (D-OH), Tom Harkin (D-IA) and Sheldon Whitehouse (D-RI). The legislation would exempt over 99.75% of Americans from paying any estate tax whatsoever. This legislation would exempt the first $3.5 million of wealth in an estate from federal taxation ($7 million for couples) as a result the tax is only paid by multi-millionaires and billionaires, fewer than one in 350 estates. The tax is graduated, i.e., an estate between $3.5 million and $10 million would pay a 45% rate, the same as the 2009 level. The rate on the value of estates above $10 million and below $50 million would be 50%, and the rate on the value of estates above $50 million would be 55%, the top rate in 2000. The bill also imposes a10% surtax on the value of an estate above $500 million ($1 billion for couples). According to Forbes, there are only 403 billionaires in the United States with a collective net worth of $1.3 trillion. As Bill Gates Sr. has written an estate tax “is a means by which wealthy people pay back the society and the commonwealth that has made their wealth possible.”

The Commission should look to where the money is and urge a tax on financial speculation. A modest tax on financial transactions could easily raise more than $150 billion a year. A modest .5% tax on stock trades .02% on trades of futures and credit default swaps would have almost no impact on ordinary investors.  The United Kingdom raises $40 billion a year by just taxing stock trades.  The much larger and wealthier United States would raise much more. Over 200 economists have endorsed the financial transactions tax as a means to raise money and slow short-term financial speculation which is more akin to gambling than investment in the real economy.

This Commission should also be looking at discretionary spending that is bloated or inconsistent with current government objectives.

More than half of the discretionary spending of the federal budget goes to weapons and war.  The Commission must look to this budget if it is to restrain government spending. One challenge you face is that the DoD budget, and many of the expenditures on the wars in Iraq and Afghanistan, have been un-auditable.  The Commission should recommend reforms that ensure that taxpayers know where weapons and war budgets go.  In 2008, the Government Accountability Office found that 95 major weapons systems have exceeded their original budgets by a total of $295 billion, bringing their total cost to $1.6 trillion.  Out of the annual $700 billion DoD budget, about $400 billion is devoted to weapons and services provided by private contractors. Making reforms to the weapons procurement system so that cost overruns are no longer acceptable would be a major source of balancing the budget.  This is just one area where cuts are possible in the military budget.  In addition, the United States should be constantly reviewing the closure of some of the 1,000 military bases and outposts around the world. The wars in Iraq and Afghanistan are projected to cost $2 trillion – all in borrowed money. The war in Afghanistan – where it costs $1 million to keep one solider for a year – is costing $7 billion per month in borrowed dollars.  Wars should no longer be fought on debt.

Another area where this Commission should conduct an in-depth review is corporate welfare.  This is any action by local, state or federal government that gives a corporation or an entire industry a benefit not offered to others. It can be an outright subsidy, a grant, real estate, a low-interest loan or a government service. It can also be a tax break – a credit, exemption, deferral or deduction, or a tax rate lower than others pay.  Corporate welfare is unfair, destroys incentive, perpetuates dependence and distorts the economy in favor of concentrated, near monopolistic, corporations.  In 1998, TIME Magazine concluded that Federal Government alone gives $125 billion a year in corporate welfare after an 18 month investigation.  No one knows how much is spent on corporate welfare today, estimates range in the hundreds of billions – not counting the bailouts of Wall Street and the auto industry.  Corporate welfare funnels money to the top, providing billions of dollars to the already wealthy and concentrating power in the hands of a few.  As TIME concluded “One role of government is to help ensure a level playing field for people and businesses. Corporate welfare does just the opposite. It tilts the playing field in favor of the largest or the most politically influential or most aggressive businesses.”

Some corporate welfare works against the goals of government.  Today, one goal is break American addiction to oil.  Yet, while the oil and gas industry is experiencing record profits, the Green Scissors Campaign reports the industry is set to receive at least $33 billion in handouts from taxpayers over the next five years. These companies stand to gain at least $23.2 billion from tax loopholes, $3.8 billion in royalty rollbacks, $1.6 billion in direct subsidies for research and development, and $4.3 billion through accounting gimmicks.

Corporate welfare to the oil and gas industry is one example among many. A detailed review of corporate welfare would greatly explain the deficit spending of the federal government.

Social Security and Medicare have become even more important as a result of the economic collapse.  The loss of wealth suffered by older Americans in the economic collapse has left people in their late 40s and older with almost nothing other than Social Security and Medicare.   These two very popular and successful programs should not be cut, indeed, they should be expanded.

The discussion of Social Security has been filled with inaccurate information about the stability of the Social Security fund.  Cutting Social Security will not reduce the deficit. Social Security has accumulated a massive surplus—$2.5 trillion now, rising to $4.3 trillion by 2023. This vast wealth was collected over many years from workers under the Federal Insurance Contributions Act (FICA) to pay in advance for retirement.  The money Americans have paid to Social Security will keep it solvent through 2043, and after that 80% funded. These funds do not belong to the government; they belong to the people who paid for it. FICA is not a tax but an involuntary retirement savings – a contract that must be respected. Merely raising the cap on income taxed for Social Security will ensure its survival and allow its growth.  Indeed, in the years that follow the current baby boom generation Social Security will return to full solvency as the birth rate has dropped from the current 2.7 rate to 2.1 children per couple.  Thus, Social Security will be paying benefits to fewer people.

Regarding Medicare, this Commission should recommend that Medicare be improved and expanded to cover all Americans. This will greatly reduce future deficits.  Health care is the driving cost of future budget shortfalls.  If the per person cost of health care was the same in the United States as in any other wealthy country, rather than seeing deficits the United States would experience surpluses.  This Commission should use its platform to urge the removal of the profit-driven health insurance industry from the equation. This will save Americans $400 billion in annual health care expenditures and reduce government deficits. This basic fact is central to understanding the long-term deficit that this Commission is wrestling with.

The goal of fiscal responsibility and meeting the urgent necessities of the American people are not inconsistent.  But, to meet those twin goals this Commission needs to look to who has profited from the creation of debt, where discretionary funds are being spent in unnecessarily and counterproductive ways and tax concentrated wealth created by three decades of government policy.

Testimony before National Commission on Fiscal Responsibility and Reform by:

Kevin Zeese is executive director of Prosperity Agenda, www.ProsperityAgenda.US Contact: KBZeese@gmail.com or 443-708-8360.

Today life-saving legislation that clarifies confusion between the public health code and penal code around syringe possession passed and is heading to the Governor of New York.

Syringe exchange programs reduce transmission of HIV and Hep C, but some people were afraid to participate because cops would often arrest them for possession of used syringes. This new law makes it clear that people can possess syringes without fear of arrest. This will increase utilization of these effective public health and safety programs!

From the PITTSBURGH POST-GAZETTE:

A state report released last week is encouraging in that it estimates the number of patients who contracted infections while hospitalized is dropping, but it’s too early to declare victory in this costly fight…

Going forward, the state will use federal stimulus funds to conduct audits at select hospitals, targeting those with very high rates of infection and those with very low rates. That should ensure that the hospitals all are using the same criteria for reporting and that the data provide an apples-to-apples comparison. In the future, the state should have access to 12 months of information for each year so it won’t have to project the annual infection rates as it did for 2008…

Valid information about how well hospitals control infection within their walls is vital for consumers as they make decisions about where they seek medical care. In addition to reducing the rates of illness and death, preventing hospital-acquired infection is key in helping to tamp down the spiraling cost of medical treatment. The report says that in Pennsylvania alone, such infections add more than $3 billion a year to the cost of care…

Click here to read the full article.

An article “Pennsylvania Academy of Music gets OK to use restricted endowment money to pay operating expenses; Former benefactors try to block move” reports:

“A bankruptcy court judge’s ruling Tuesday was music to the ears of Pennsylvania Academy of Music officials. The judge allowed PAM to use money in a restricted endowment to pay operating expenses, a move that lets the academy keep operating…

“PAM’s bid to tap the endowment was opposed by Ware, a former PAM chairman, and his wife, Judy.  They have donated an undisclosed amount to the endowment and untold millions to PAM.  Ware left the academy board last summer…”

WATCHDOG: It amazes us how Ware, who had served as chairman when the mistakes were made that put PAM into such financial difficulties, seems so determined to prevent it from recovering.   Instead of chastising himself for his folly, he seems to be taking out his wrath on the institution he formerly sought to help.

Moreover, what is meant by “They have donated…untold millions.” ?  Ware guaranteed millions in loans but the near miraculous decision by Millersville University to acquire the facility for around $14 million relieved Ware of most, if not all, of his obligations.

Perhaps it would have been better said “On behalf of Ware, the state taxpayers donated untold millions.”

From the FINANCIAL TIMES:

US lawmakers scrapped a proposed $19bn bank fee on Tuesday night as Democrats struggled to secure sufficient votes to pass the Wall Street reform bill.

Chris Dodd, the Democratic chairman of the Senate banking committee, dropped the fee and proposed new ways to pay the costs of the legislation to win the vote of Scott Brown, a Republican senator, who said he could not vote for the bill if it stayed in…

The elimination of the bank fee is a victory for Wall Street , the latest in a series to be delivered by Mr Brown, who as a freshman senator has exerted an unusual amount of influence on the bill in an institution that normally prizes seniority…

Click here to read the full article.

Editor’s comment: “Death be not proud.” The passing of Ted Kennedy and now Robert Byrd have had almost as great an effect upon the future of our nation as did their lives.  In both cases, the ramifications have been very sad.

Barely two weeks after a challenge to an estate valued at over a million dollar bequeathed to the Lancaster County Public Library (Duke Street) was dismissed by Orphan’s Court, attorney Stephen Blair filed an appeal on behalf of his father-in-law former Judge Wilson Bucher and himself.

Thomas Bucher, the judge’s son and Blair’s brother-in-law, had bequeathed his entire estate to the library in a Will he wrote five years before his death.  Despite the passage of time and Bucher’s successful work history, the elderly Judge Bucher and Blair challenged the Will on the basis that Thomas was subject to an “insane delusion” at the time it was written.

Senior judge Joseph H. Kleinfelteris decision left little doubt concerning the validity of the Will based on both the facts and the meaning of “insane delusion” under state law and the rarity of its application.   Meanwhile, the cost of litigation to the library is well over a hundred thousand dollars, money meant to improve its services and facilities.

Now the estate will be further depleted in dealing with appeals which some believe reflect an intention to drag the process out as long as possible.  “Insane delusion”? By whom?

Full disclosure: The Watchdog’s wife, Karen Haley Field, is the Administrator for the Estate  on behalf of the Lancaster Public Library.

Jonathan Alter writes concerning the Recovery Act, “The biggest frustration involved infrastructure.   Obama said later that he learned that ‘one of the biggest lies in government is the idea of “shovel-ready” project.’  It turned out that only about $20 billion to $40 billion in construction contracts wear truly ready to go.  The rest were tied up in the endless contracting delays and bureaucratic hassles associated with building anything in America.”

WATCHDOG: Not only did the Lancaster Public Library (Duke Street) have “shovel ready” plans for renovation and construction, but there were ample funds in a state grant, pledges, promises and even money on hand to at least renovate the building.  The Board was advised that if they approved the renovation phase, the funds for expansion would likely be forthcoming from the federal government within half a year as part of a forth coming recovery legislation.

Given the agendas of a couple of members and the inexperience and fear of the others, it was like talking to a wall.  This was another example of a decade of wrong-headed decisions, not only in Washington, but also in Lancaster.

“Cornered is a real eye opener for American’s business community.  Barry Lynn details how the concentration of power in large global corporations can hurt entrepreneurs, stunt innovation, and slow growth.  This book is essential to understanding how we got into our current mess.” – Michael Mandel, chief economist, Business Week

The following are excerpts from the Preface of Cornered: The New Monopoly Capitalism and the Economics of Destruction by Barry C. Lynn, Wiley, 2010. The Watchdog will publish additional excerpts daily during his vacation with family.  He considers Cornered to be the most important book on economics since John Maynard Keynes’ The General  Theory.

“…The Meltdown or 2008 even delivered my punch line for me:  that American financiers had erected a particular form of socialism that enabled them to dump all the risk in the  industrial and banking systems they control onto us, even as they jetted away with all the profit.”

“A generation ago a highly sophisticated political movement appeared in the United States. This movement was decimated to taking apart the entire institutional structure that we had put into place, beginning in the mid-1930s, to govern our political economy by distributing power and responsibility among all the people.  The goal of this movement was to enable the few, once again, to consolidate power entirely in their own hands.

“That’s why one of their very first targets was our antimonopoly laws.  To justify this action, these revolutionaries preached an alternative philosophy of political economics – sometimes call free-market fundamentalism.  This philosophy depicted our political economy not as political in nature but as a sort of organic mechanism that worked best if left untouched by human beings.  The revolutionaries also promoted an alternative language of economic inquiry – based on the idea that economics is a science.  Rather than describe the interaction of people in our economy as a function of law and politics, they preferred the languages of mathematics and mysticism.

“I use the language of political economics not to make us angry at any person or group bugt to help us see the political lies that have been framed by the free-market fundamentalists and the economically  deranging effect of those lies…If we wish to stop the rich from ruining, we must speak honestly of how they rule.”

“Your comment is pure BS. I will read Judt’s book but from your comment it seems like hyper socialism to me. Medicare is about to be screwed big time by withholding care from the elderly based on a Govt bureaucrat who, by virtue of his / her position will not be affected by it. The more welfare you pay the more welfare required. Read “Losing ground” by Charles Murray.”

The readers comment is predictable — indeed, Judt predicts it in his book.  He points out that one way discussion is shut down in the United States is by people who see “socialism” in every government action.  Rather than discuss the merits of a particular program, what is the most efficient and effective way to accomplish an end, they see government and always see socialism.  We’ve seen this recently in the discussion of unemployment benefits.  People say — if we give more unemployment benefits there will be more unemployed people.  I wonder if the change to government managed fire departments led to more fires!

As to Medicare, the reader should look at the facts rather than buy into phony free market rhetoric.  There are no death panels in Medicare, but private insurance companies actually hire people whose job it is to deny care, i.e. serve as a death panel.  Medicare has been one of the most successful programs in American history.  It is quite amazing that the government has been able to provide access to health care to a very difficult population — the elderly along with 2 million disabled people — who need more health care than younger, healthy people.  Medicare provides comprehensive set of predicable benefits; universal access for those who qualify by age or disability, regardless of pre-existing conditions; free choice of physician, other providers, and hospitals anywhere in the country; simplified administration costing only about 3 percent in overhead compared to 15% to 20% for private insurance.

Further, research has shown that Medicare provides better health care than private insurance.  A study published in 2009 by the Commonwealth Fund compared the experiences of elderly Medicare beneficiaries with those of people under age 65 with employer-based, private health insurance. Even though Medicare beneficiaries were older and sicker, their experiences were better across the board, with better access, higher-rated quality of care, fewer problems with medical bills, and higher satisfaction with coverage at lower cost.  Another HHS study published in June cited substantially higher satisfaction among Medicare patients than among those with private insurance — 56 percent of enrollees in traditional Medicare give Medicare a rating of 9 or 10 on a 0-10 scale, compared to only 40 percent of Americans in private plans.

There is no question Medicare is imperfect and needs improvement but that is the reality in every human endeavor.  The fact is that improved Medicare for all would have been a much better and less costly solution to America’s health care crisis than massive subsidies of $400 billion in taxpayer dollars annually for the insurance industry along with forcing Americans to buy a private corporate product as the new health care law requires.

Shouts of socialism block fact-based discussion on what actually works.  Time to move away from socialism or libertarianism and focus on pragmatism — what works.  Sometimes it will be government, sometimes it will be private business or individuals, but usually it will be a blend.  Indeed, Medicare is an example of a blend — where the funding comes from taxpayers but health care is provided by private doctors, health providers and hospitals.

The Manheim Township and Warwick Democrats are sponsoring an open forum with Tim Potts, co-founder of Democracy Rising, on July 7th at the Manheim Township Municipal Building. The forum will discuss the possibility of a Constitutional Convention to reform state government. Discussion will begin at 7:00 pm.

Democracy Rising is a non-partisan organization focused on educating citizens about their ability to achieve lasting reforms in state government.  Democracy Rising poses the question, “Why doesn’t our state government have the highest standards of public integrity in America?”

Corruption within the legislative caucuses and the inability to pass a state budget in a timely fashion highlight the need for a Constitutional Convention Referendum.

The BONUSGATE grand-jury report was an extremely rare supplemental pronouncement on the state of our government, and had many specific recommendations for restructuring and reforming the legislature.

The Pennsylvania Senate and House each have a Democratic and a Republican caucus, organizations headed by their party leaders, staffed mainly by the party faithful, and funded by taxpayers. The report states that the 2,800 legislative employees amount to nine for each representative and 17 for each senator.

“Despite the best efforts of numerous witnesses before the grand jury, nobody was able to justify such a large number of employees for this body,” the jurors wrote.

The report also calls for a limited constitutional convention, saying it is concerned that the General Assembly “will remain in its ‘time warp’ and meddle with, obfuscate, ignore or kill every recommendation.”

As of this writing, it appears that once again the Commonwealth’s budget may fail to be adopted by the fiscal deadline, repeating last year’s budget crisis.

Please join voters from around Lancaster County for this important discussion.

Meeting will begin at 7:00 pm. The Manheim Township Municipal Building is located at 1840 Municipal Dr, Lancaster, PA 17601.

For more information, contact Doreen Kreiner at 717-393-7915 / doreen@kreinerforcommissioner.com

The Manheim Township and Warwick Democratic Committees are sponsoring this forum as an information session. The opinions of the participants in the event are not necessarily the position of the Committees.