Strengthening the Economy
(So Our Children Don’t Have To)
The New Year’s Eve that preceded 2013 was certainly memorable, but not in a good way. My staff and I spent the holiday in Washington, D.C., to deal with the dreaded “fiscal cliff.”
That grim phrase had been on everyone’s lips for the previous several months. Of course, it referred to the December 31 deadline for Congress and the President to reach an agreement on the budget to avoid sequestration, a set of across-the-board spending cuts that would be automatically triggered at the same time that tax breaks expired. Economists warned that the failure to reach a deal would disrupt the markets, leading to job losses and quite possibly another massive recession.
On the evening of that deadline, I was in the rotunda of the National Archives Building where Democratic Leader Nancy Pelosi and nineteen other members of Congress were attending the 150th anniversary of the Emancipation Proclamation, the document that marked the beginning of the end of slavery in the United States. The irony was inescapable: We celebrated a historic act of courageous leadership as we faced the prospect of witnessing a historic failure of leadership that very same night.
If so, that failure would belong to House Speaker John Boehner (R-OH), whose usual policy was to only allow bills to reach the floor if they were going to get votes from the majority of his Republican members, also known as the “Hastert Rule,” after the previous speaker who adopted the practice. With one eye on the Emancipation Proclamation and the other on our mobile phones, we learned just before ten o’clock that Senate Republicans had reached a deal with the White House that would increase tax revenues from the wealthiest Americans and postpone the sequester cuts for two months. As details of that deal emerged, scores of House Republicans made it known that they would reject it. Members of the party’s Tea Party Caucus even left Capitol Hill in hopes of blocking a House vote through their absence. In effect, they had decided to put their personal ideology above the national economy.
Ultimately, Speaker Boehner realized that the only way to avoid triggering sequestration was to abandon his party’s majority. He recruited eighty-five Republicans to join him, and along with myself and other House Democrats, we finally passed the legislation, which was then signed by the President. We avoided going over the fiscal cliff, barely.
This close encounter begged the question: Had we learned so little from the last recession that we were ready to risk a new one? We teach our children to learn from their mistakes, yet the very leaders elected to represent us had not learned from their own. The mistake was not the decision to bail out the banks, or the American Recovery and Reinvestment Act, as Tea Party Republicans believed. Rather, the mistake was all the wild, unpaid-for spending that came before. And it was the attitude that we’ll worry about the future when it arrives. In this instance, even though we avoided going over the fiscal cliff, we did so by pushing back the sequester by two months. Another can kicked a little farther down the road.
We can no longer afford to put off the tough, practical decisions that must be made to stabilize the economy. They will only grow in magnitude, and if we fail in this regard, those decisions will be thrust upon our children. That is unacceptable. Our children deserve to grow up in a national economy that offers them a fulfilling career, with income sufficient to raise a family of their own and then to retire in comfort. I share conservative Republicans’ concern about the national debt, but the debt we owe to the next generation is the greatest, most demanding one of all.
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The first order of business is to make sure that we have learned from the financial follies of recent years. Like all political events, the Great Recession’s origins are open to interpretation. So let’s stick with the facts. We know that in the fall of 2008, the national economy shrunk by nearly 5 percent. It was by far the biggest financial collapse since the Great Depression. Prior to this crisis, banks had been approving mortgages for homes to buyers that just a few years before would have been declined, based on the risk that those buyers would default on their payments. Rather than preach financial prudence, lenders often encouraged borrowers to take out a larger loan than they could afford, or that they needed.
At the other end of the spectrum, Wall Street investment firms bundled these mortgages into investable products—mortgage-backed securities—and sold them to investors, who often had little idea of what it was that they were actually investing in. Meanwhile, rating agencies like Standard & Poor’s, Moody’s, and Fitch did not adjust their ratings to reflect the risk these investment firms were taking. This signaled to others in the market that mortgage-backed securities were safe investments. The housing industry had been booming for years, but history shows that this market always goes through cycles. The boom was unsustainable.
While this disaster was brewing in the private sector, the public sector was being battered by the economic recklessness of President George W. Bush’s administration. The spending spree started with the post-9/11 invasion of Afghanistan. There’s no question that pursuing Al Qaeda was the right policy; the tougher question was how to pay for it. Past wars had been financed either through the issuance of war bonds or through increased taxes. President Bush didn’t propose any method at all.
Nor did President Bush have a method for dealing with the expenses of another war, in Iraq. This one was based on faulty, trumped-up intelligence and it came with no exit strategy. Indeed, as then Defense Secretary Donald Rumsfeld said at an October 2003 press conference, “The bulk of the funds for Iraq’s reconstruction will come from Iraqis—from oil revenues, recovered assets, international trade, direct foreign investment, as well as some contributions we’ve already received and hope to receive from the international community.”
Like most of Rumsfeld’s predictions, that didn’t quite happen. Both foreign conflicts added greatly to the national deficit. The Iraq War alone cost about $800 billion. If you factor in long-term benefits to be paid out to U.S. troops either killed or wounded in battle, the final tab for the Iraq War is projected to be roughly $1 trillion, a bill that belongs to U.S. taxpayers.
As if it wasn’t enough to put two wars on what amounted to a credit card, President Bush insisted on sweeping tax cuts in 2001 and 2003. Those cuts were skewed toward the wealthiest Americans, dramatically reducing the amount of revenue the government had for improving our children’s education. It would make it harder to modernize our national health-care system. We would be unable to make investments in domestic infrastructure and innovation. At the same time, we racked up record budget deficits.
To add one final insult to these injuries, President Bush made one more massive purchase: In 2003, he extended Medicare coverage for prescription drugs. It was an important and worthwhile investment; but it was the responsibility of the President and the Republicans in Congress to find a method to pay for Medicare’s drug coverage, known as Part D. Again, they failed to do so. It was little more than a cynical maneuver to win votes among seniors before the 2004 election. And it blew another gaping hole in our deficit, plunging the country further into debt. The record budget surplus that the Bush administration inherited from President Clinton was a distant memory.
Having been sworn in to Congress in 2005, I wasn’t there for those far-reaching Bush spending decisions. But the overwhelming majority of my Democratic colleagues opposed President Bush’s out-of-control spending spree with criticism that now seems prophetic. In 2003, then Senate Majority Leader Tom Daschle called for a “return to fiscal responsibility” and warned about the dangers of running deficits instead of paying down the debt.
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For all these reasons, the federal government was in no condition to “bail out” anyone in the fall of 2008. But there was no other solution. Allowing those banks and investment firms to fail would have frozen the credit markets, making it virtually impossible for families to get loans for cars and homes. In fact, in October of 2008, I recall sitting in a meeting in which House Democratic Leader Pelosi recounted her conversation with then Treasury Secretary Henry Paulson. He reportedly told her that we had to pass a bank bailout bill “immediately” and the situation was very dire.
Without the government’s intervention, interest rates would have shot up on everything from construction bonds to credit cards. Many businesses would have been unable to even make payroll. Paulson himself later told CBS News that without congressional action to stop the slide, unemployment would hit 25 percent, putting the crisis on the scale of the Great Depression. These were the Main Street consequences of Wall Street financial institutions being overwhelmed by “toxic assets”—that is, investments that had lost value they would never recover. This classification included an exotic array of formerly obscure financial products like mortgage-backed securities, collateralized debt obligations, and credit default swaps.
In response to this catastrophe, the Bush administration sent Congress a three-page bill that proposed to bail out the banks, but the bill came with no consumer protections and no accountability for the banks whatsoever. Given the role that lack of regulation played in bringing about the crisis in the first place, this was clearly unacceptable, even as a short-term solution. Through negotiations between Speaker Pelosi and Secretary Paulson, the Democratic Caucus had committed to providing the voting majority needed to pass the bill; still, we insisted that the legislation contain measures for holding the failing banks accountable, along with language that required taxpayers’ money to be paid back, with interest.
I vividly remember the House debate on September 29, 2008. As members vowed to vote against the Emergency Economic Stabilization Act, a $700 billion purchase of financial firms’ “toxic assets,” the Dow Jones tumbled. Minority Leader John Boehner had fallen short of delivering the 100 Republican votes he had committed to, and as a result the measure was defeated. The Dow Jones lost nearly eight hundred points—the largest one-day drop in U.S. history. Later that week, we brought forward another piece of legislation that contained the same basic provisions as the EESA (Emergency Economic Stabilization Act), along with a number of “sweeteners” designed to win over reluctant members of the House to vote for the bill. It would become known as TARP—the Troubled Asset Relief Program, and the market regained much of what it lost, but for how long? No one knew. The world’s most eminent economists each seemed to have a different answer.
It was one of the most frightening and disturbing moments I can remember in my lifetime. I had never seen such an immediate connection between the votes we took in Congress and events in the real world.
The bailouts were not popular among voters, of course, and I definitely had my own misgivings about the legislation we approved that day. The easy thing to do would have been to vote against TARP, then go home to the cheers of those constituents who wanted to see the banks punished.
But it was also one of those moments that reminded me about the responsibility that comes with being elected to public office. Sometimes, the right decision is not the popular one. I certainly remember hearing about it later in town hall meetings. By the same token, I’m fortunate: So many of my constituents who may oppose a piece of legislation like the bailout still trust that I have done my due diligence, then made an informed decision for what’s best for the district and the nation. They want someone who will make that decision and then meet with them to explain all the considerations that went into a vote.
I understand why Tea Party protesters would be enraged by government bailouts and stimulus spending, just as I appreciate the “99 percent” activists’ fury over the financial elite’s disproportionate control of the nation’s wealth. Make no mistake, the executives at Fannie Mae, Freddie Mac, and AIG were not sympathetic “victims” of misfortune—they were architects of their own disaster. Still, there were millions of Americans whose financial well-being was, unbeknown to them, intertwined with these enormous institutions. These were the people who would truly suffer, and my vote for TARP was cast with them in mind.
Legislators on both sides of the aisle recognized this, which is why TARP even garnered a vote from a Tea Party darling like Rep. Paul Ryan. (Of course, that vote didn’t stop him from railing against the program in the years to follow.)
By late 2008, the automobile industry was also on the brink of ruin. For years American automakers had faced increased competition from foreign companies, who had long succeeded in making their cars cheaper than American manufacturers, and had become increasingly competitive in matching the quality and innovation, not to mention fuel efficiency. This placed considerable strain on American auto manufacturers whose workforce and infrastructure still reflected the bygone days when they made the vast majority of the cars sold in the United States.
Among the Big Three automakers, Ford fared best, largely because the company had turned to the private market in 2007 for $23.5 billion in finance restructuring. When the financial crisis struck in 2008, it collapsed the capital lending markets, meaning that when GM and Chrysler needed finance restructuring packages of their own, they could not get a loan on the private market. So at the same time as they were hit with a massive drop in revenue from domestic car sales, they didn’t have the capital needed to sustain operations.
If those companies were to survive, the government would have to bail them out—except the notion of rescuing car makers was even less popular among Americans than the bailout given to Wall Street executives. Understandably, taxpayers were in no mood to reward auto CEOs who had failed to adapt their companies to a changing marketplace and who seemed woefully out of touch, flying to congressional hearings in their corporate jets.
As President Obama took office, he faced the terrible prospect of watching two of the largest, oldest manufacturers in the country go out of business, an outcome that would cost more than a million Americans their jobs, harming the American economy both psychologically and operationally.
Again, the unpopular decision proved the correct one. Under the terms of their loans, GM and Chrysler were forced to agree to a fundamental restructuring that would make them more competitive. It worked. They were able to pay back the loans just two years later, in 2010, and were soon turning profits again. Not only did that intervention save over a million jobs, but the revived auto industry has added roughly a quarter million new jobs in the last few years. Considering all the Republicans—including Michigan native Mitt Romney—who wanted to let the automakers fail, this episode was a vivid demonstration of the difference in vision between the two major parties.
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The next urgent piece of legislation, of course, was the American Recovery and Reinvestment Act of 2009—the federal “stimulus bill” that invested capital to jump-start the national economy. The Act would legislate a combination of tax cuts and targeted spending on historically neglected issues like infrastructure, alternative energy, and health information technology. There was no doubt the economy needed a kick start. The question was how much of an infusion was necessary.
It was the subject of ferocious debate. The Tea Party had organized to oppose this policy on the grounds that it would lead to more debt and higher taxes, while rank-and-file Republicans stoked the usual fear over big government. These critics overlooked the fact that the legislation included generous tax cuts amounting to approximately 36 percent of the cost of the legislation. Those tax cuts were to be enjoyed by 98 percent of Americans. The stimulus was both a badly needed tourniquet to stop the hemorrhaging of jobs from our economy and an injection of capital into the economy via tax cuts.
Based on what was known then about the scale of the financial crisis, the Obama administration’s Council of Economic Advisers concluded the stimulus should amount to roughly $2 trillion. But those advisers knew that it would be difficult to design a foolproof method for recovering the investment. They also realized that such an outlay had the potential to spook the financial markets and trigger a political meltdown on Capitol Hill by Republican legislators. Ultimately, Obama’s financial team proposed an $850 billion stimulus, and in order to earn votes from Senate Republicans, that amount was whittled down to $787 billion, passing by the slimmest of margins against GOP resistance.
I recall thinking that the Republicans’ opposition to this spending smacked of hypocrisy, because so many of those same Republicans had blown through the record budget surplus that had been handed to President George W. Bush by President Bill Clinton. Many of the Republican opponents of the Recovery Act had voted for the 2001 and 2003 Bush tax cuts, the wars in Iraq and Afghanistan, and the Medicare Part D plan, all unpaid for. Led by Representative Ryan, Republicans favored a crash diet of spending cuts along with the always fashionable tax cuts skewed toward the wealthiest Americans.
Guess what? The stimulus should have been larger—much, much larger. The Obama administration was reacting to the worst-case scenario as portrayed by the Bureau of Economic Analysis, a nonpartisan agency within the Commerce Department, which projected the economy was shrinking at an annual rate of 3.8 percent in the last quarter of the 2008 fiscal year. That worst-case scenario was wrong. In actuality, the economy that quarter was shrinking at an annual rate of 8.9 percent.
Nevertheless, it was the biggest stimulus that Democrats could pass through Congress in the face of opposition from Republicans who favored Ryan’s austerity measures—to slash programs for seniors, children, the poor, and the middle class. Even if the independent analysts had produced a more accurate projection of economic shrinkage, I seriously doubt that congressional Republicans would have agreed to a larger stimulus than was passed.
In 2011 and 2012, the House Budget Committee, of which I was a member at the time, held multiple hearings about the state of the economy, providing me the opportunity to ask leading authorities on fiscal policy whether TARP, the Recovery Act, and the auto bailout helped, or whether we should focus on a cuts-only approach. In particular, I recall putting these questions to then chairman of the Federal Reserve, Ben Bernanke. He told me the same thing that I heard from then Treasury Secretary Timothy Geithner and the director of the nonpartisan Congressional Budget Office (CBO), Douglas Elmendorf: The stimulus most definitely did help the economy and Ryan’s plan would harm the economy, disrupting the recovery.
So there is no credence to the Republican refrain that “the stimulus didn’t work.” When Fox News Channel personalities brought me on the air to defend the stimulus, they took this refrain as gospel, despite all the evidence to the contrary. The Bureau of Economic Analysis statistics show that America’s GDP had been declining dramatically over the previous four quarters and that almost immediately after the signing of the Recovery Act the national economy stopped contracting, then began to grow again by the middle of 2009. It always takes a little time for economic growth to produce higher employment numbers, but the same trend occurred there: The rate of job losses slowed shortly after the stimulus, continuing on that path until about a year after the stimulus, when the United States finally showed net job growth.
The stimulus has not permanently fixed the economy—and no Democrat, including the President, ever said it would. But it has undoubtedly succeeded in averting a far more spectacular economic meltdown. If the stimulus hasn’t been as effective as we might have hoped, the primary reason is that Republicans insisted on it being smaller than it should have been and because the increase in federal spending has been neutralized by decreases in spending at the state level, where conservative principles are being applied.
The Great Recession was triggered by a reckless tax policy and a “fox guarding the henhouse” approach to regulation by a Republican President who was aided by Republican legislators. Their policies were both the cause of the problem and the obstacle to the solution.
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For better or worse, our society is more aware today of the importance of economic policy and financial literacy. I hope that this results in more lasting, commonsense reforms. My husband, Steve, is a commercial banker, and he’s always told me that his community bank prefers to work out a payment plan with a customer as opposed to going through the arduous foreclosure process. The difference is that Steve works at a community bank, which is small enough that a client can speak directly to his or her lender, then negotiate terms that make it possible for the loan to be worked out and brought current under mutually agreed upon terms. With a bank so close to its clients, common sense can be applied to every transaction.
The problem at the nation’s biggest banks was not only that they were too big to fail; they were too big to bother talking to their clients. Within these massive financial institutions, the entity you received the loan from may not own it anymore, because those mortgages were resold so many times. My congressional office has received numerous calls from people trying to reach someone at their bank to talk about the status of their loan. My district staff does its best to help my constituents get their banks on the phone, but there are so many layers of bureaucracy, no one at the banks even seems to know where to start, and some have deliberately attempted to avoid resolving mortgagees’ problems. It’s infuriating that these banks received TARP money, which spared them from going under, and yet they still refuse to work with people.
The same can be said of efforts to reform the too-big-to-fail culture on Wall Street. Much like the stimulus package, the Dodd-Frank Act is a flawed piece of legislation that doesn’t quite go as far as it needs to in response to the economic crisis—the same banks are still too big to fail—but it’s the most our party could get in a Congress where too many Republicans refuse to acknowledge the dangers of a deregulated market. It protects consumers from predatory lenders and ensures that bankers can’t make the same reckless investments. It’s not perfect, but it’s progress; and yet the majority of Republicans campaigning in 2012 vowed to repeal it and return to the days of Wall Street self-regulation that got us into this mess in the first place. Rather than repeal it, the two parties should be working together to refine and improve Dodd-Frank.
The system has clearly run amok, and it goes beyond just the banks. In my first year in Congress, I remember getting a tour of the New York Stock Exchange (NYSE) with the rest of the freshman class serving on the House Financial Services Committee. We had a meeting in the boardroom. The principals of the NYSE were proud to tell us that their system was essentially self-regulating, and that struck me as risky for consumers and for the stability of the financial system. Clearly, the Securities and Exchange Commission failed to exercise its regulatory authority as well, and one of the lessons of the recession was to empower that agency, which was one aspect of the Dodd-Frank Act of 2010.
Another aspect of the legislation was the creation of the Consumer Financial Protection Bureau (CFPB), which is tasked with looking out for Americans who venture into markets for consumer financial products and services. That activity may take the form of a mortgage application or a credit card contract, among others. Given the way financial services firms violated the trust of American consumers in the years leading up to the crisis, consumers were absolutely entitled to more security. Prior to Dodd-Frank, there was no federal agency that specifically looked out for the consumers’ interests in the financial sector.
Yet that same financial services industry whose greed triggered the meltdown had the nerve to fight these commonsense reforms, and the GOP was there to do their bidding. A group of forty-four Senate Republicans vowed to oppose nominations at financial regulatory agencies—unless those agencies agreed to changes in structure that would make them completely powerless in regulating the financial industry. These same senators blocked President Obama’s initial selection to head the CFPB, the woman who developed the concept, Elizabeth Warren. Ultimately, she set up the agency without being nominated and President Obama nominated Ohio Attorney General Richard Cordray. The Republicans in the Senate stalled his nomination for months and the President eventually used a recess appointment to install him. After his reelection, President Obama renominated Richard Cordray to head the CFPB, setting the stage for another potential clash with Senate Republicans. It is frustrating to have to deal with these obstructions, but it shouldn’t discourage us from our objective: to put America’s economy back on the right course.
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We must take the same commonsense approach to reforming our nation’s tax code. It must ensure that everyone pays their fair share in order to reduce our deficit and invest in future economic growth. Unfortunately, Washington has become so paralyzed that in the past few years, there has been little room for even commonsense reforms. Republicans have become absolutely enraged about the raising of the debt ceiling. For all the political strife in Capitol Hill’s history, a party had never refused to raise the debt ceiling as a negotiating tactic, because the consequences of refusing were so unthinkable: America would default on its bills and ruin its credit. Our entire economy relies upon the premise that the United States stands behind the value of its currency and will repay any debts incurred. If the United States suddenly stopped paying its bills, no one would want to loan us money, the value of the dollar could collapse, and foreign investors would be running for the exits. There would be economic chaos not only in this country but worldwide. In other words, it would be crazy to do this to ourselves.
The first sign of trouble came in the summer of 2011 as President Obama sought a deal to raise the debt ceiling. Republicans in Congress refused to grant their support unless the President met their demands: draconian budget cuts aimed squarely at programs that benefit the middle class, seniors, and the poor. In effect, they were playing a high-stakes game of chicken with the economy.
President Obama and congressional Democrats wanted a more balanced approach to deficit reduction, which would include both spending cuts and raising revenue by eliminating tax breaks for individuals whose income placed them among the top 1–2 percent of U.S. households. Ultimately, in August 2011, with the economy hanging in the balance, Republicans got their “cuts-only” deal.
I have spent my career opposing cuts like those that came with that legislation. I hated the deal, but I voted for it, because unlike Republicans I wasn’t willing to let America default on its bills. I also knew that we couldn’t engage in a “my way or the highway” approach to governing that the Republicans, radicalized by their Tea Party members, had adopted. It was my responsibility to go back home to Florida to explain the debt ceiling crisis and my vote to my constituents.
Of course, one of the reasons we have a debt problem in the first place is that deficit reduction and tax cuts are often at odds. A good example of this can be seen in the demise of the Budget Enforcement Act. Signed into law by President George H. W. Bush in 1990, it was a way to stop the growth of the colossal deficit created under President Ronald Reagan. This legislation introduced the practice of “pay-as-you-go,” also referred to as PAYGO, which made it necessary for Congress to increase taxes or make spending cuts if it wanted to fund a new program. The idea is, you pay as you go, just like in a household budget where you try not to spend more than you take in. But when that rule expired in 2002, it was Democrats who sought to renew it completely. Republicans, on the other hand, did not—unless Democrats agreed to exclude the need to pay for tax cuts. Of course, this would take the teeth out of the Act, because tax cuts reduce the government’s revenue, meaning they must either be paid for by severe cuts to government services or by running up enormous debt. Democrats insisted that any tax cuts would have to be paid for, and in return Republicans kicked PAYGO to the curb, because it stood in the way of passing tax cuts for the wealthiest 2 percent of Americans, not to mention that it would have forced Republicans to figure out how to pay for the war President George W. Bush was looking to wage in Iraq.
So it was surreal to watch the 2012 Republican National Convention and hear a procession of speakers blaming the sluggish economy on the so-called liberal spending of President Barack Obama. Some may have even believed he was at fault. But the truth is that every major policy contributing to the growth of public debt since 2001 was either directly initiated by President Bush (such as the tax cuts and the Iraq War) or initiated in desperate response to a financial collapse that began during his administration.
I’m sure most Republicans would agree that the annual rate of growth in federal spending is an excellent way of judging a President’s commitment to conservative principles. If so, they may be surprised to know that the most conservative President over the last thirty years is the much-maligned Barack Obama. The most “liberal” with spending was Ronald Reagan. President Reagan let government spending grow by nearly 9 percent each year during his first term, while in Obama’s first term, spending has risen just 1.4 percent. That includes the stimulus package. The next most “conservative” President? Bill Clinton, who never let government spending grow by more than 4 percent in any of the eight years he was in the White House.
So either our Democratic presidents are closeted fiscal conservatives, or the Republican presidents are really, really bad at staying true to their supposed conservative principles. Whatever the case, I would ask the truly conservative voters in America, with legitimate concerns about our nation’s debt problems, to consider whether the Republican Party has proved itself trustworthy.
In addition, it is time for registered Republicans and fiscally conservative independents to demand that the GOP make a more meaningful commitment to serving voters in every income bracket, as opposed to the recent trend to serve the narrow interests of the nation’s wealthy.
According to the Congressional Budget Office (CBO), income inequality in America has stayed relatively constant over the last twenty years for 99 percent of the population. By contrast, the income of the top 1 percent has grown dramatically—especially since 2001. Adjusting for inflation, the after-tax income of middle Americans grew by a modest 40 percent between 1979 and 2007, according to a CBO analysis. It increased by 65 percent for upper middle-class Americans. But for the richest one percent, income skyrocketed 275 percent over that twenty-eight-year span. And as the chart above makes clear, those inequalities became even more pronounced after 2001, when Bush rolled out his first round of tax cuts for the wealthy. This single truth blows a gaping hole in “trickle-down economics,” the idea that the benefits of tax cuts for the wealthy would trickle down to the middle class.
I’m not vilifying the wealthy—there are plenty like Warren Buffett and Bill Gates who are activists for income fairness and make generous donations to humanitarian causes. Nor do I mean to diminish the success of those in the 1 percent. In fact, I represent a congressional district with a fair amount of “1 percenters.” Rather, I’m asking the wealthy to consider the harm that will be done if the gap between the rich and the rest of us is allowed to widen.
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One of the only good things to come out of the financial crisis is that we finally have the political momentum it takes to address the widening gap. The refrain of “We are the 99 percent” is really an outgrowth of frustrations by the middle class. To me that expression is symbolized by working families, and they’re right to complain about policies that appeal to that powerful, privileged 1 percent.
During his reelection campaign, President Obama frequently said that America prospers when everyone does his or her fair share, plays by the same rules, and has the same shot at success. For this to be the case, the wealthiest Americans should not pay a smaller share of their income in taxes than middle-class families pay. Given the importance of the economy in the 2012 campaign, the voters’ decision to reelect Barack Obama gave the President a fresh mandate to put these principles of income fairness into effect. It should have come as no surprise, then, when he insisted that a balanced deficit reduction package include an increase in taxes on the wealthiest 1 percent of American taxpayers.
Yet Republicans seemed indignant that the President was unwilling to yield to their demands of a cuts-only approach to deficit reduction. By refusing to compromise, they were holding the American economy hostage, preferring to go through with the massive, across-the-board cuts that came from sequestration rather than raise taxes on the wealthy. It took the assistance of Vice President Joe Biden before Republicans finally reached a compromise with the President, and in January 2013 tax cuts were allowed to expire on Americans making more than $450,000 a year.
While this was indeed a step in the right direction, it should be seen as only the beginning of long-overdue tax reform. It is time to close tax loopholes, ensure that everyone pays their fair share, and begin to restore a measure of equality of opportunity to attain a decent standard of living in this nation, so that we can all enjoy success. But House Republicans’ refusal to close those loopholes led to even more clashes with the White House, culminating in the $85 billion in sequester cuts that were triggered on March 1, after the two sides failed to reach a deal.
One President and one party in Congress are not enough to overcome the lockstep obstruction of today’s GOP. Congressional Republicans and presidential candidates are happy to tell voters what they want to hear, how cutting taxes and cutting spending while scaling back government regulations is a panacea; but they refuse to acknowledge the necessity of a balanced approach to government that allows us to continue our economic vitality by investing in education, innovation, and infrastructure.
The time has come for registered Republicans to demand that their leaders be responsible stewards of the national economy. It’s a party that today is focused more on getting elected than on the responsibilities of governing. America is strongest when both parties are engaged in a good faith effort to create jobs for all Americans.
I think of my legislative occupation as an extension of my familial job, being a mother to my three young children. And I can’t imagine jeopardizing their economic future for a short-term political reward. To do what’s right, you have to be willing to risk losing. We must move beyond pure party loyalty and be willing to come together, spend some of our precious political capital, and take risks that can benefit the next generation.
After all, the courage to risk failure in pursuit of success has been a defining feature of the American character since the Declaration of Independence. We must never lose that force of will. At this crucial moment in our nation’s history, the middle class needs strength. These hard-working folks have been battered by more than a decade of war. They have suffered under the weight of tax policies tilted in favor of the rich. And they have been demoralized by the looming presence of an enormous national debt. These American families deserve a path forward and the peace of mind that comes with knowing that their children will be allowed to compete on a level playing field, with a fair shot at achieving lifelong financial security.
Copyright © 2013 by Debbie Wasserman Schultz with Julie M. Fenster