Tuesday, September 2, 2014

The Reverse New Deal: Los Angeles crumbles, federal aid dries up, regressive taxation is proposed, and tax evasion & avoidance runs rampant

(In the photo above, WPA workers are building a sidewalk in Allegany County, Maryland. In Los Angeles, "More than 4,000 of the 10,750 miles of sidewalks are in severe disrepair." Photo courtesy of the University of Maryland College Park Archives.)

The New York Times ran an interesting article yesterday, "Infrastructure Cracks as Los Angeles Defers Repairs." In the article, we learn that Los Angeles has serious problems with its roads, sidewalks, and water lines--problems that have caused massive water loss, lawsuits, and expensive auto repairs for its citizens.

To me, the most interesting aspect of this story is that it highlights how Republican policies shift the revenue burden away from millionaires & billionaires (who can afford it), towards the middle-class & poor (who are struggling to make ends meet). In the article, we learn that (a) Los Angeles's infrastructure problem "is exacerbated by cutbacks in federal spending on public works" and (b) conservative talk show host and public official Kevin James is calling for a sales tax increase--a tax increase that would disproportionately affect the middle-class and poor (sales taxes are highly regressive).

This same phenomenon is happening all across the country. Instead of increased federal aid for infrastructure (such increases are routinely blocked by Republican and Tea Party politicians) we see increased & regressive taxes, tolls, fees, and fines at the state & local level. In my home state of Maryland, for example, the toll to cross the Chesapeake Bay Bridge went from $2.50 to $6.00 in just 2-3 years--a 140% increase (bridge tolls, like sales taxes, are highly regressive). 

Federal aid could be increased, of course, by raising tax rates on the super-wealthy (tax rates that are now historically low), and also by cracking down on super-wealthy tax cheats (we lose about $300 billion--per year--due to tax evasion, practiced largely by the super-wealthy--see here and here). But Republican and Tea Party politicians are actively working to protect the super-wealthy from paying more, with a two-pronged strategy: First, as we all know, they work hard keep tax rates low on the super-wealthy. And second, they work hard to protect super-wealthy tax evaders from law enforcement. See, for example: "Republicans bash U.S. law targeting offshore tax dodgers" and "Policing Tax Evasion Could Save Billions, But Republicans Won't Fund Enforcement." As Heather Lowe of Global Financial Integrity said, "It is mind-boggling that a major political party would even consider endorsing a resolution to facilitate tax evasion."

(In the photo above, WPA workers are on a road project in Baltimore, Maryland. In Los Angeles, "The average car owner here spends $832 a year for repairs related to the bad roads..." Photo courtesy of the University of Maryland College Park Archives.)

During the 1930s and 40s, New Deal policymakers funded massive infrastructure improvements. For example, the CCC developed hundreds of state and national parks, the PWA funded the work of private contractors, and the WPA hired the unemployed to build or improve thousands of bridges, buildings, airports, and more. A researcher at the time noted, "So vast have the WPA's achievements been that attempts to present them in quantitative terms only stagger the imagination" (Donald Howard, The WPA and Federal Relief Policy, p. 126, New York: Russell Sage Foundation, 1943).

Middle and low-income Americans, who have seen their household income drop as corporate profits have soared, desperately need a new and even stronger New Deal. Unfortunately, as our country descends further and further into plutocracy, all they're going to get are increased taxes, tolls, fees, and fines.

Welcome to the Reverse New Deal.

4 comments:

  1. Reverse New Deal. I think you've got a new catch phrase!

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    1. Yep, and we're definitely in the Reverse New Deal: Curtailed infrastructure investment, no public jobs program for the long-term unemployed, kid gloves treatment of corporate wrongdoers, etc., etc.

      Ha, lucky us!

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    2. I think there is job assistance and work programs at least for returning vets?

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    3. just band-aid programs, nothing wide-scale like the CCC or WPA.

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