The Progress Report: January 31, 2005

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Progress Report: Plan for Progressive Reform

" American Progress Action Fund "

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The Progress Report

by Christy Harvey, Judd Legum and Jonathan Baskin

with Nico Pitney and Mipe Okunseinde

..January 31, 2005

 

 

 

TAXES A Plan for Progressive Reform

IRAQ Post-Election Challenges

UNDER THE RADAR Go Beyond The Headlines

 

 

 

TAXES A Plan for Progressive Reform

 

Over the last four years, President Bush's tax schemes have made the

system more complex, shifted more of the burden to the middle class

and exploded the federal deficit. We can do better. Today, American

Progress is releasing a plan for progressive tax reform that proves

it. The American Progress plan is fiscally responsible reform that

significantly simplifies the system, restores fairness and increases

economic opportunity. Here are the highlights:

 

SIMPLICITY – REDUCE THE NUMBER OF TAX BRACKETS: President Bush has

added over 10,000 pages to the federal tax code. The American Progress

plan would make the system far simpler. The number of tax brackets

would be reduced from six to just three – 15 percent (for income up to

$25K), 25 percent (for income between $25K and $120K) and 39.6 percent

(for income over 120K).

 

SIMPLICITY – CLOSE LOOPHOLES: The plan would close loopholes in the

corporate income tax code, including the " Bermuda " loophole that

allows U.S. firms to avoid paying taxes by moving their operations

overseas. By closing individual loopholes, the plan would also

eliminate the need for the Alternative Minimum Tax (AMT) – a special

rate initially created to ensure that the very rich pay some taxes.

Without reform, the AMT would impact 36 million Americans by 2010.

 

FAIRNESS – TAX ALL INCOME THE SAME: Under the Bush administration's

tax policies, middle-class Americans are shouldering more of the

burden. The American Progress plan corrects that by simplifying the

rate structure and taxing each source of income the same – whether it

is dividends from investments or wages.

 

FAIRNESS – ELIMINATE REGRESSIVE SOCIAL SECURITY TAXES: One of the most

regressive components of our tax system is the employee Social

Security payroll tax. The flat 6.2 percent tax employees pay on their

first $90K of income imposes an effective tax rate four times larger

for middle-income workers than the top 1 percent. The American

Progress plan would eliminate it. Social Security funding would be

strengthened by eliminating the cap on employer contributions

(currently there is no employer contribution for income in excess of

$90K) and devoting 2.25 percent of Gross Domestic Product (GDP) from

general revenues. The plan would not only preserve Social Security

funding but cut the program's long-term deficit in half.

 

FISCAL RESPONSIBILITY – REDUCE THE DEFICIT: The federal government is

on pace to rack up another $1.4 trillion over the next ten years. The

American Progress plan is fiscally responsible, reducing the revenue

shortfall by $478 billion compared to the administration's budget. At

the same time, the American Progress plan would include a tax cut for

the 70 percent of Americans who earn up to $200,000, providing an

average cut of over $600.

 

OPPORTUNITY – INCENTIVES FOR ALL AMERICANS TO SAVE: The American

Progress plan would create new opportunities for tens of millions of

Americans to save and create wealth. The current deduction system is

upside-down – providing a greater incentive to save if you have a

higher income (and pay a higher marginal tax rate). The plan would

create a new across-the-board 25 percent refundable tax credit for

retirement savings. This would provide the same incentives for every

American – whether an investment banker or a secretary – to save,

including the 33 million Americans who don't earn enough to have

income tax liability.

 

OPPORTUNITY – INCREASE TAKE HOME PAY FOR LOW-INCOME TAXPAYERS: The

American Progress plan provides more take home pay for those who need

it most. Currently, more than 20 million of the country's poorest

children receive less than the full benefit from the child tax credit,

and 8 million children receive no benefit at all. The American

Progress plan gives every family earning over $5,000 a year access to

the child tax credit. It also makes sure that single working parents

who receive the Earned Income Tax Credit don't lose their benefits

just because they get married.

 

 

IRAQ

Post-Election Challenges

 

Millions of Iraqis cast their ballots yesterday in the nation's first

free, democratic election in a half-century. According to a rough

estimate by election officials, 60 percent of the 14 million eligible

Iraqis voted (that's roughly the same percentage of Americans who

voted in the past U.S. presidential election). Iraq's national

security chief said: " The election was a victory of our own making. "

The director of a polling station in Baghdad concurred, saying, " No

one has ever witnessed this before. For a half-century, no one has

seen anything like it. And we did it ourselves. " As the Washington

Post points out, " Yesterday, however, Americans finally got a good

look at who they are fighting for: millions of average people who have

suffered for years under dictatorship and who now desperately want to

live in a free and peaceful country. " For that to happen, it is

crucial for the White House to see yesterday as an important step in

the quest for a peaceful Iraq while remembering there are still tough

challenges ahead.

 

THE SECURITY CHALLENGE: As the 44 deaths on Election Day remind us,

security in Iraq remains a challenge. Yesterday, President Bush said,

" We will continue training Iraqi security forces so this rising

democracy can eventually take responsibility for its own security. "

Efforts to train Iraqi security forces, however, have thus far been

slow. There have been mass desertions: AP reports " close to 10,000

Iraqi National Guardsmen have been dropped from the rolls in the last

six months. " There have also been massive equipment shortages. (The

U.S. military, in fact, no longer makes public figures on how many

have been fully equipped with " armor, weapons, vehicles and

communications gear. " ) The administration claims over 120,000 Iraqis

have been trained as of Jan. 19; other estimates show the real number

is closer to 14,000, with only a third ready for battle. Even taking

the administration's numbers at face value, however, would mean the

White House is only treading water. Today, the Pentagon says it has

reached 46 percent of its goal to train 271,000. That's about the same

ratio as six months ago, when the U.S. said it had 87,000 personnel

trained, or about 45 percent of the U.S. goal at the time. Also, six

months ago, the White House projected Iraqi forces would be completely

trained and equipped by spring 2005; today that date has been pushed

back to summer 2006.

 

THE ECONOMIC CHALLENGE: The election is an important step, but as

Anthony Cordesman of the Center for Strategic and International

Studies warns, " elections don't fix economies. " Many Iraqis remain

concerned about the lack of progress of reconstruction. (As one Iraqi

woman told U.S. soldiers: " We have no gas, no kerosene, we care about

that more than voting. " ) The U.S. has mismanaged reconstruction funds

from the beginning. Less than one-fifth of the $18 billion in

reconstruction funds has been spent so far. And as a " scathing " new

audit shows, " Coalition Provisional Authority (CPA) administrator L.

Paul Bremer is unable to account for nearly $9 billion in

reconstruction funds. " According to the report of the special

inspector general for Iraq reconstruction, under the CPA, the

financial process was " left open to fraud, kickbacks and

misappropriation of funds. " For example, the CPA " may have paid

salaries for thousands of nonexistent employees in Iraqi ministries,

issued unauthorized multimillion-dollar contracts and provided little

oversight of spending in possibly corrupt ministries. "

 

THE SUNNI CHALLENGE: While turnout yesterday was high, the Sunnis –

who make up one-fifth of the entire Iraqi population – stayed away

from the polls. As the New York Times points out, " the impressive

national percentages should not obscure the fact that the country's

large Sunni Arab minority remained broadly disenfranchised – due to

alienation or terror or both. " In order to ensure the country doesn't

fall into civil war, great efforts must be taken to fully incorporate

this group into the new government. One possibility would be to

include Sunni legal experts on the committee to draft the new

constitution, which is slated to be presented to the Iraqi people on

Oct. 15. Spokesmen for the Sunnis have also told Time magazine that " a

scheduled exit of U.S. troops is an essential condition for any

negotiations with the new government. " President Bush has yet to come

up with a plan for peace or an exit strategy for U.S. troops.

 

CREDIT WHERE CREDIT IS DUE: As President Bush claims credit for

success, it's worth keeping in mind this wasn't the original White

House plan. The administration initially wanted to turn control over

to the now-discredited Ahmad Chalabi. Then, as the Washington Post

remembers, the White House " resisted the idea of holding elections

this soon and only succumbed under pressure from Iraq's most powerful

cleric, Grand Ayatollah Ali Sistani. " Iraq expert Juan Cole charges,

" It was Sistani who demanded one-person, one-vote elections. So to the

extent it's a victory, it's a victory for Iraqis. The Americans were

maneuvered into having to go along with it. " And while President Bush

hails yesterday's success as validation of his administration's

policies, " recent opinion polls indicate that many Iraqis viewed the

election as one way to accelerate the U.S. withdrawal rather than as a

vindication of U.S. policy. "

 

Under the Radar

 

CORPORATE WELFARE – WHEN THE CASH COW COMES HOME: Come one, come all,

it's another corporate giveaway. Last year's American Jobs Creation

Act, a bill sped through Congress while everyone else was distracted

by the presidential election, included a dubious provision that allows

corporations to repatriate their piles of foreign profits at a rate

much lower than the normal corporate tax rate. Successfully forced

through by a lobbying coalition of " dozens of America's largest

corporations, " the idea behind this " tax holiday " was that the flow of

money coming in – estimated to be between $100 billion and $500

billion by the end of 2005 – would lead to job creation here at home.

However, as a New York Times editorial explains, " few of the approved

uses for the repatriated funds…will lead directly, if at all, to more

jobs. " All this information comes days after a congressional study

found tax revenues could increase " by $311 billion over the next 10

years " if the federal government started enforcing tax obligations and

closing loopholes. In light of the fact that " corporate tax receipts,

relative to the size of the economy, [have] sunk to a level not seen

since 1983 and, before that, the Great Depression, " our government

needs to stop letting itself get milked.

 

SOCIAL SECURITY – THE LENINIST STRATEGY: How has Social Security

privatization, once an unspeakable notion on Capitol Hill, moved to

the top of President Bush's agenda? As the Los Angeles Times reports,

nothing less than a twenty-year right-wing " economic education

campaign " inspired by the work of Russian Bolshevik Vladimir Lenin.

" Our reform strategy involves what one might crudely call guerrilla

warfare against both the current Social Security system and the

coalition that supports it, " Heritage Foundation analysts Stuart

Butler and Peter Germanis wrote in a 1983 Cato Journal article titled

" Achieving a 'Leninist' Strategy. " Today, as President Bush musters

support for his plan, he is able to draw " on a deep reservoir of

resources – including policy research, ready-to-hire experts and

polling on how to discuss the issue – that conservatives have created

over the last 20 years. " And despite the fact that conservative

predictions about Social Security's financial collapse have proven

false, and that the privatization model in Chile they hold with high

regard has left Chileans worse off, the " education campaign " continues.

 

SOCIAL SECURITY – " YOU CAN'T GET OUT WHAT YOU CAN'T PUT IN " : When the

president starts bemoaning the life expectancy gap between minority

groups and whites, it should give us hope that our government is

finally going to begin tackling health care access, community

violence, high unemployment, disparate wages, and other social ills.

It should not be a ploy to garner support for an ill-fated Social

Security plan. Unfortunately, President Bush has decided to step up

his privatization rhetoric by taking advantage of a sad statistic: the

discrepancy between the life expectancy of blacks and whites. In fact,

President Bush neglects that some of the actual realities of life for

blacks in America – lower wages and a higher chance of disability –

are part of the reason why " the [social Security] program may actually

benefit blacks more than whites. " And analysts from the AARP, economic

scholars, and the Social Security Administration's own actuaries agree

with this conclusion. As economist Jeffrey Liebman stated, " If the

problem we're trying to address is African-Americans having lower life

expectancy, increasing their retirement benefits and their ability to

pass wealth on to their children is not the way to do that. " In

response to President Bush's latest Social Security sales tactic, Rep.

Charles Rangel (D-NY) replied, " It is one of the cruelest things that

I have ever read, and I regret that it comes from the office of the

president. "

 

HOMELAND SECURITY – THE ROOF IS ON FIRE: A recent report by the Boston

Globe found that, nationwide, firefighters " are arriving to fires

later each year, with barely over a third of fire departments meeting

standards for response time. " On top of that, those who do arrive are

ill-equipped, " working in substandard conditions, arriving too late

with too few people. " The situation is so bad that the former New York

City deputy fire chief stated simply, " Fire protection in America is a

myth. " And though the lack of human and equipment resources is

largely due to underfunding, last year's Homeland Security

appropriations bill signed by President Bush cut funding for first

responders by nearly $500 million and shortchanged programs vital to

local fire departments.

 

ADVERTISING – TARGETING TOTS: McDonald's CCO Malena Peleo-Lazar

admitted last week that the fast food firm targets children as young

as four years old with McDonald's advertising campaigns. Most

processed food companies, including Kraft Foods, General Mills and

PepsiCo, don't run ads unless the majority of the media audience is of

the ripe old age of six, trade journal Ad Age reports. Today, some 15

percent of American children are overweight or obese, according to the

Centers for Disease Control and Prevention, and physicians report

" more frequent cases of obesity-related diseases such as type 2

diabetes, asthma and hypertension that once were considered adult

conditions. " Last year, the American Psychological Association

recommended banning ads in TV shows when more than half the audience

was younger than 8 years old. Food-marketing conglomerates and their

advertising agencies responded by forming a new political lobbying

group, the Alliance for American Advertising, to fight restrictions on

youth advertising.

 

 

DON'T MISS

 

DAILY TALKING POINTS: Iraq Elections: What Next?

http://www.americanprogressaction.org/site/lookup.asp?c=klLWJcP7H & b=310272

 

ACCOUNTABILITY: New Education Secretary Margaret Spellings admits

" errors of judgment " in Armstrong Williams payout.

http://www.usatoday.com/news/washington/2005-01-30-spellings-williams_x.htm

 

SOCIAL SECURITY: FDR's grandson calls Bush's implication that his

grandfather would support privatization " an attempt to deceive the

American people and an outrage. "

http://www.boston.com/news/globe/editorial_opinion/oped/articles/2005/01/31/dont\

_use_fdr_to_undermine_social_security

 

STATES: How well does your state manage information, money and people?

Check out the new report card by the Government Performance Project.

DAILY GRILL

http://www.stateline.org/stateline/?pa=story & sa=showStoryInfo & print=1 & id=428206

 

 

 

 

" We really do believe, Bob, that this is something that can be dealt

with diplomatically. What is needed is unity of purpose, unity of

message to the Iranians that we will not allow them to skirt their

international obligations and develop nuclear weapons under cover of

civilian nuclear power. " – Condoleezza Rice, 1/30/05

 

VERSUS

 

" France, Germany and Britain – with European Union support – opened

negotiations with Iran last month.... Instead of embracing the

initiative, Mr. Bush began his second term with a sweeping pledge to

defend the United States and protect its friends 'by force of arms if

necessary' and a refusal to rule out military action against Iran. " –

New York Times, 1/28/05

DAILY OUTRAGE

 

How do you lose nearly $9 billion? Just ask former Iraq administrator

L. Paul Bremer. A new government audit shows that, with Bremer at the

helm, the Coalition Provisional Authority lost track of $8.8 billion

in Iraqi money, " opening the door to possible fraud, kickbacks and

misuse of funds. "

http://www.nytimes.com/2005/01/31/politics/31audit.html

 

Progress Report

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