The Stand

Fiscal cliff or slope? Plenty of money, just not enough jobs

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By JEFF JOHNSON


(Dec. 12, 2012) — The week after Thanksgiving I was in Washington, D.C. lobbying our Congressional delegation on the so-called fiscal cliff.

The atmosphere was frenzied. Mainstream media has so fanned the flames of confusion that one would think that if an agreement is not reached by Congress and the President by Jan. 1, 2013, our country will actually fall off the edge of a treacherous cliff and we will all plummet to our deaths.

According to the sequestration agreement of 2011, if no agreement is reached on deficits, debt, and taxes then $ 100 billion a year, $ 1.2 trillion over the decade, will be cut from social programs and the military.

So what’s the real scoop? Well, life will go on after Jan. 1 whether an agreement is reached or not. Payroll taxes will go up on the middle class and the wealthy. (But you can bank on the fact that payroll taxes on the middle class will  come right back down once an agreement is reached in January). Spending cuts will begin but the truth is spending cuts take time and more likely than not Congress will push back the timing on sequestration cuts as they negotiate.

So what are the various positions? The Republicans would like to keep all of the Bush tax cuts in place — about $2,000 a year for middle-class earners and $160,000 a year for the wealthy. But doing this explodes the deficit so they have to see cuts in Social Security, Medicare, and Medicaid.

The President and Congressional Democrats want to keep the tax cuts for the middle class and let the tax cuts for the wealthiest 2% expire. What is not yet clear is how strong their resolve is to not compromise on the safety net programs.

Labor and our community allies want to see the tax cuts for the 2% expire and no benefit cuts to Social Security, Medicare, and Medicaid. Allowing the tax cuts for the rich to expire will bring in $1 trillion which can be used to cancel the across-the-board sequestration budget cuts. Let the new Congress negotiate over real tax reform, job creation, and controlling health care costs.

We believe that the voters spoke loud and clear against the Romney/Ryan plan of handouts to the rich and cutting the safety net. Working people and the poor have already paid more than their fair share in higher unemployment, lower wages and benefits, and $1.7 trillion in social spending cuts in the 2011 debt ceiling agreement.

There is no good reason to cut benefits in our social safety net programs. Social Security has never added a penny to the debt and  shouldn’t be on the table unless it is to consider scrapping the cap and raising benefits. We have no Medicare or Medicaid crisis, we have a health care cost crisis. Both Medicare and Medicaid are significantly more cost efficient than private health insurance and the expansion of Medicaid is a key component in making the Affordable Care Act operational.

But we need to bring down runaway health care costs. According to the Congressional Budget Office, if we allowed Medicare to negotiate over the cost of prescription drugs, we would save $500 billion over the next decade. Further if we created a real public option for health care another $130 billion in savings would occur. Finally we could save hundreds of billions more if we moved from a “fee for service” health care system to one that pays for results.

And we need to create jobs. Twelve million workers are unemployed in the U.S., and two million nationally and 60,000 in Washington State will lose federal benefits on Dec. 31. This is a tragedy! If we invested in a full employment we would add $900 billion annually to our economy. That is the way to rebuild our communities and to  bring down deficits.

Let’s jump off the fiscal cliff and grow the economy through taxing the rich, controlling health care costs and creating jobs.


Jeff Johnson is President of the Washington State Labor Council, AFL-CIO, the largest labor organization in the Evergreen State, representing the interests of more than 500 local unions and 400,000 rank-and-file union members.

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