Our Fiscal Crossroads: It’s Your Economy

Friday, November 30, 2012

This essay was originally published on Huff Post Politics

The phrase "fiscal cliff" has been buzzing by our ears like a gnat threatening to bite ever since Election Day and has interrupted what should be a celebratory moment in American politics. As part of the work of Strong Families, we decided to roll up our sleeves and see what all the "fiscal fuss" was about to help make the nebulous term accessible to the communities we live and love in.

"Fiscal cliff" is a name intended to scare us by evoking the stomach-lurching experience of suddenly falling into an abyss. The good news is that it is not as intimidating as its name. Simply put, the fiscal cliff is a deadline that Congress gave itself for dealing with the looming problem of balancing the budget -- a problem that must be addressed by the end of the year or else a series of self-inflicted punishments go into effect -- a combination of tax increases and spending cuts that would bring income and expense into closer alignment.

Instead of the cliff analogy, we would like to refer to this moment as a "fiscal crossroads," because unlike a cliff, a crossroads represents a choice. In order for our elected officials to make good decisions at this crossroads, there are a important myths that we need to confront head on.

Myth #1: Poor people just want "stuff and things."
Low-income folks contribute a lot to society not only through labor and through taxes, but like any good American -- through spending. Generally, those who are not wealthy have slimmer chances of filling savings accounts because of low wages and spend money immediately, pumping money back into the economy. Even so, people want to work for better wages and a higher quality of life -- just look at the recent Walmart strike.
Myth #2: Rich people hate paying taxes and they want to reduce government spending. Not true! Just check out this video by millionaires for higher taxes. These folks get that they benefit from roads, bridges, and WiFi that works and although they don't mention it in the video, we would venture to guess that many of them also really want to live in a country (and a world) where kids have enough to eat, and parents don't need to choose between infant formula and rent.
Myth #3: Immigrants are "taking advantage" of the social safety net. Immigrant labor is one of the main drivers of the U.S economy and immigrants often pay more in taxes than they have ever received in safety net benefits. So, the question is how can immigrants take advantage of a safety net that their work helps to sustain?
Myth #4: Social Security is broken. People that are low income to middle class are the ones footing the bill in a tax system that unfairly burdens us because any income beyond $110,000 in income is exempt from paying into Social Security. According to former New York Times financial reporter David Clay Johnston, Social Security ended 2011 with a $2.7 trillion surplus. In a blog published on Reuters last spring he wrote, "That surplus is almost twice the $1.4 trillion collected in personal and corporate income taxes last year. And it is projected to go on growing until 2021, the year the youngest Baby Boomers turn 67 and qualify for full old-age benefits."

So why all the talk about Social Security "going broke?" That theme filled the news after release of the latest annual report of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds, as Social Security is formally called. The reason is that the people who want to kill Social Security have for years worked hard to persuade the young that the Social Security taxes they pay to support today's elderly will do nothing for them when they age.  

Myth #5: This is way too complicated! No, it's really not. There is a lot of jargon around this conversation that almost seems designed to keep regular people from getting involved. But here's the truth: The people we elected and who we pay with our tax dollars need to find a way to bring the budget into balance so we can continue investing in the things we know to bring about long term benefits to our society, like education, job training, and everyone having access to quality food, shelter, and medical care. In order to do that, we need to bring in more revenue. Economists agree: letting the Bush era tax cuts on the wealthiest 2 percent expire would be a good start.

It's your crossroads; which path do you want to take?   

Co-authored by Lisa Russ and Kortney Ryan Ziegler, Ph.D.