Dem Senate candidates talk about federal debt
The U.S. Capitol building (Photo by Heath Haussamen)
‘We cannot force American workers, the elderly, the poor and the sick to shoulder the burden alone,’ Martin Heinrich says; Hector Balderas says, ‘Now is the time to invest in education, infrastructure and renewable energy.’
This post continues a series on the U.S. Senate and 1st Congressional District candidates’ stances on various policy issues.
Martin Heinrich supports pay-as-you-go budgeting and more transparency and accountability in spending to deal with the nation’s deficit, while Hector Balderas says the United States must invest in education and other programs to boost the economy before working to reduce the deficit.
Both Democratic U.S. Senate candidates say the wealthiest Americans should pay more in taxes. Heinrich said he supports ending the Bush tax cuts “for millionaires and billionaires.”
“We cannot force American workers, the elderly, the poor and the sick to shoulder the burden alone while the wealthy get wealthier,” he said.
In addition to ending the Bush tax cuts, Balderas said he supports implementation of the Buffett Rule – which would apply a minimum tax rate of 30 percent on those who make more than $1 million a year – and ending a loophole that allows individuals and corporations to avoid taxes by keeping money overseas.
The state auditor said such revenue-raisers should be coupled with efforts to combat fraud, waste and abuse, saying, for example, “reducing improper Medicare and Medicaid payments alone could save roughly $70 billion a year.”
Heinrich pointed out that he has fought to reinstate “pay-as-you-go” budgeting as a member of the U.S. House, and he said the United States must “demand transparency and accountability to guarantee all taxpayer money is used properly and that redundancies within the federal government are eliminated.” He cited his vote against the alternate F-35 engine that the Obama administration “does not want nor need” as an example.
To reduce spending, Heinrich also said it’s also time to bring American soldiers home from Afghanistan.
Before focusing on reducing the deficit, Balderas said, the federal government must work to create jobs and return revenue to “normal levels.”
“Until we solidify our economic foundation, we cannot cut back on federal assistance to states or funding for programs and initiatives that help the middle class,” he said. “Now is the time to invest in education, infrastructure and renewable energy.”
The questions
The Democratic U.S. Senate candidates made their comments in response to questions from NMPolitics.net about the economy. NMPolitics.net gave them no word minimum or limit, telling them to say what they had to say. The only criterion was that they not engage in personal attacks.
Here are the questions NMPolitics.net asked:
- The United States’ debt has become a major issue – politically and otherwise – in recent years, especially as nations like Greece, Italy and Portugal struggle to deal with overwhelming problems. How serious is the problem in the United States?
- What specific funding cuts and/or revenue increases will you support to get the problem under control?
- What policy changes, if any, are needed to address the problem?
Their responses, published in their entirety:
Martin Heinrich (Courtesy photo)
Martin Heinrich
“New Mexicans can all agree that our nation’s large and unsustainable budget deficit must be addressed. But the approach we take must focus on responsible cuts, which will have a lasting impact on the deficit. How we fund our government is an expression of our collective ambition. We cannot force American workers, the elderly, the poor and the sick to shoulder the burden alone while the wealthy get wealthier.
“We need to end the Bush tax cuts for millionaires and billionaires, reinforce our commitment to PAYGO, and eliminate waste, duplication and inefficiencies within the federal government. It’s also time for our brave service men and women in Afghanistan to come home to their families.
“I fought to reinstate ‘pay-as-you-go’ (PAYGO) budget discipline in Congress, which is based on the simple principle of paying for what we buy. Used in the 1990s, PAYGO helped turn massive deficits into record surpluses.“Finally, we must demand transparency and accountability to guarantee all taxpayer money is used properly and that redundancies within the federal government are eliminated. That is why I voted for an amendment to cut $450 million for the alternate F-35 engine, saving an estimated $3 billion to complete development and begin initial production over the lifetime of the contract. The Administration does not want nor need the extra engine.
“The act of cutting the deficit and reducing government spending is not easy, but will result in a stronger middle class and a brighter future for our children.”
Hector Balderas (Courtesy photo)
Hector Balderas
“The greatest threats to our long-term solvency are a weak economy, an under-skilled workforce, and a lack of creative and entrepreneurial thinking. Congress impairs our ability to responsibly control the debt when it fails to respond to the jobs crisis in a meaningful way by investing in programs that will drive the future. Until we solidify our economic foundation, we cannot cut back on federal assistance to states or funding for programs and initiatives that help the middle class. Now is the time to invest in education, infrastructure and renewable energy.
“Investments in education, above all, provide the necessary fuel for long-term economic growth and deficit reduction. Everyone benefits when creative and skilled thinkers bring new ideas to the marketplace and start new businesses. We cannot starve our schools of the resources necessary to prepare students for this type of leadership in the global economy. The numbers alone also tell us that education gives rise to deficit reduction: Students who complete high school and college enjoy far more earning power while requiring fewer government resources.
“When economic growth does return to our country at a livelier pace – that is, when American workers have jobs and the government’s revenues return to normal levels – then it is the time to begin reducing the deficit. When that time comes, we must be careful not to succumb to knee-jerk plans that harshly cut the nation’s safety net and its support for the middle class. Such draconian measures would undermine our long-term economic growth, which is the greatest factor in our ability to manage our debt over the long run. Instead, we must take a balanced approach that combines increasing revenues and eradicating the fraud, waste, and abuse in many of our programs. For example, reducing improper Medicare and Medicaid payments alone could save roughly $70 billion a year.
“First, we must end the Bush tax cuts for the wealthiest Americans. Doing so would save billions of dollars. Additionally, implementation of the Buffett rule, which would ensure that the highest earners pay the same tax rates as the middle class, would further save the federal government $45 billion over the next ten years. We also have to make sure that wealthy individuals and corporations cannot evade paying their fair share by hiding money overseas. According to a recently released U.S. PIRG study, the United States loses out on $100 billion per year from this tax loophole, unfairly burdening the rest of us who do pay our taxes. New Mexicans alone shoulder approximately $300 million of this burden. Making sure that our government programs are run in an efficient, cost-effective manner will be another priority of mine. Allowing Medicare to negotiate prices for prescription drugs, for example, would help us drive down health care costs by hundreds of billions of dollars. I support policies like these because they are commonsense methods of reducing the deficit in a responsible manner.
“Ultimately, it is vital that we keep in mind future generations and the country they will inherit. When I think of my children and other New Mexican families’ children, I know that it is our responsibility to provide them with all the opportunities of a robust 21st Century economy. Any debt-reduction package that does otherwise is simply irresponsible. As New Mexico’s senator, I will work to help repair our economy and fight for safe, responsible debt-reduction strategies.”
The thing of it is, is,
there was a time when top marginal rates were MUCH higher. But the amount of tax collected as a percentage of GDP was about the same.
This tends to corroborate Laffer when he says that the rich pay less percentage tax REGARDLESS of how you tax them,
because they, with their wealth, can change the form, timing, and amount of their income to whatever the current rules are.
Middle income people, collecting a salary, can’t otherwise avoid the taxes.
This doesn’t mean we give up, but if lowering rates ( while also eliminating deductions, which mostly benefit the rich, BTW )
can increase compliance, it will be effective.
Part of the larger issue is that spending has changed.
Forty years ago, spending was mostly defense and some government programs.
Now, Entitlements are ‘CROWDING OUT’ defense and gov programs (EPA, education, transport, etc. etc. )
Big government entitlements are the biggest threat, not just to defense, but to all government programs as well.
Government being in the retirement and medical reimbursement business is reducing government doing anything else.
Should the rich pay for the middle class retirement?
Is SS a retirement plan or welfare?
Sweden, with a notable ‘welfare state’ decided that the middle class should pay their fair share.
They kept their welfare state, but everyone is willing to pay for it and not pretend that they can squeeze it out of the rich:
http://www.washingtonpost.com/opinions/the-swedish-model/2012/04/25/gIQA3rvvgT_story.html
I will give Paul Ryan some credit for pursuing the entitlement reform.
Rs talk about cutting spending but don’t acknowledge that most of the spending is a check going to voters.
Ds talk about ‘protecting entitlements’ but don’t talk about getting the middle class to pay their fair share in addition to the rich.
(and pretend that the pittance from the ‘Buffet Rule’ will make any meaningful difference.
Both like to inflame the base, neither is doing anything to avert a debt crisis.
And they probably won’t because voters don’t understand and even if they did, lack unity and willingness to sacrifice.
So will we see riots a la Europe when the bond market fixes the problem for us?
Or will hamstrung government let inflation eat away our debts ( which ultimately causes poverty ) instead?
Either outcome seems more likely than government fixing the budget.
You’re still misleading, deceptive, and just plain wrong again, Dr. J. You’re playing games with statistics:
And for those of you who think the Bush Tax Cuts did all this, let me cite data from 2000, when Billy Bob Clinton was Prez and all was wonderful in liberal America. The top 10% of earners paid 67.33% of all personal federal income taxes, and the bottom 50% of earners paid 3.91% of all personal federal income taxes. So we have a movement of 2-3% in those 10 years, before and after the evil Bush Tax Cuts, and you want to represent that some huge sea change has occurred in America during 8 years of Bush where suddenly the rich are not paying their “fair” (as in whatever your opinion is of fair) share of taxes anymore.
During Bush II’s presidency the effective federal income tax rate for households with incomes over $1 million per year dropped from about 28% to about 23%. In other words, the very rich got a 20% effective tax rate cut, paid 20% lower rates.*
They still paid a lot of money, because their income went up a whole bunch – their income went up enough to mean that despite paying a lower rate, they paid about as great a proportion of the total tax burden.
So the rich got a whole lot richer, the rich got a whopping great tax cut, and I think that wasn’t fair. I think people who get more should pay more. If you think that the rich getting a big tax cut is fair, you probably also think that the tax cut paid for itself by stimulating the economy, and that’s why when Barack Obama took office the federal debt was almost entirely paid off because of the higher tax revenues during the Bush years. After all, Bush promised us that lower tax rates would more than pay for themselves.
*see figure 1 in the Mark Thoma article I cited earlier:
http://economistsview.typepad.com/economistsview/2012/01/should-we-feel-sorry-for-the-wealthy.html
Well, Skeptic, it is actually a Republican idea to tax unrepatriated corporate funds. We are the only nation with a “worldwide with deferral” tax on our corporations’ foreign income. Every other advanced nation uses a territorial system. So if we switch to a territorial system, which we should, then we need to set a rate lower than 35% one-time on those unrepatriated funds, whether they are repatriated or not. Republicans will want a lower one-time tax rate and Democrats a higher one, but we ought to be able to reach an agreement on the rate and make the transition. The current approach is harming us economically. Switching over to a new system with a one-time tax on unrepatriated funds will be very good for American businesses for a whole lot of reasons.
Balderas is for real tax reform, including corporate tax reform — presumably that will tax unrepatriated corporate income whether it is repatriated or not.
Right – lets reduce the competitiveness of US corporations overseas as well as abroad until no one wants to buy American.
Data and facts do not lie. Workers vs. income earners is drastically different? So we should exclude anyone who pays taxes and doesn’t have a job, or vise versa in determining who pays taxes? Let me cite the data, not the spin and denial around it to suit partisan talking points. In 2009, the top 10% of earners paid 70.4% of all personal federal income tax. That is a fact. The top 10% is defined as those who earn more than $112,124.00, that is a fact. Obama likes to cite this group as “the rich”, and he wants to tax anyone making more than this much more than today, that is a fact. Also in 2009, the bottom 50% of earners paid 2.25% of the personal federal income taxes, that is a fact. I stated the vast majority of federal income taxes are paid by the “rich”, they do, that is a fact. And for those of you who think the Bush Tax Cuts did all this, let me cite data from 2000, when Billy Bob Clinton was Prez and all was wonderful in liberal America. The top 10% of earners paid 67.33% of all personal federal income taxes, and the bottom 50% of earners paid 3.91% of all personal federal income taxes. So we have a movement of 2-3% in those 10 years, before and after the evil Bush Tax Cuts, and you want to represent that some huge sea change has occurred in America during 8 years of Bush where suddenly the rich are not paying their “fair” (as in whatever your opinion is of fair) share of taxes anymore.
Now I know it is the silly season where political lies, exaggerations, posturing, and manipulation of people and their minds is in vogue, but nothing significant has changed lately in taxes and who pays them, except for the rich paying 3% more of total taxes than they did in 2000, the middle class about the same, and poor paying less. But for those professional politicians who want to divide us as a people based on where we were born (I was born in Wagon Mound, one says), and what ethnicity we are (one mentions he is Hispanic and NM has not had an Hispanic Senator since Joe Montoya left in 1977), and even how much money we make or have (as in the above class warfare statements by both), they are constantly trying to find ways to divide America, pit one group against another, and present America as a zero-sum game when it comes to wealth and economic prosperity.
This is excellent. Some of us have been waiting for a year for these two candidates to engage each other on an issue that matters to us as voters and citizens. Forty days before the June 5th primary and two weeks before people start voting, they finally have, thanks to Heath and NMPolitics.net.
They both support the safety net. They both oppose government waste. They both favor higher taxes on the wealthy.
Congressman Heinrich is for PAYGO and responsible cuts in the Defense budget. Not sure why he voted for the V22 Osprey, and he doesn’t seem to have changed our Defense strategy much when he chaired the subcommittee on Defense strategy, but he’s fairly credible as a person who can help the nation cut our Defense budget responsibly.
Balderas is for real tax reform, including corporate tax reform — presumably that will tax unrepatriated corporate income whether it is repatriated or not. There is $2.5 trillion sitting out there that went untaxed, much of it in foreign tax shelters, and even Republican House Ways and Means Committe Chair Dave Camp is for a one-time tax on it whether it is repatriated or not. The debate is over what the rate should be on that one-time tax. But it’s good to see Balderas is aware of this and it’s a priority to him to do something about it.
Let’s give Martin Heinrich credit for being one of only 112 Democrats in Congress to vote against the absurd December 2010 tax cut. Without that tax cut, the deficits would be a lot lower right now.
The biggest difference between these two candidates seems to be that Balderas is for a big new federal investment in America’s workforce, primarily via education. I agree with Balderas that this is the best way to stimulate economic growth and job creation.
It’s great to see the two candidates sharing their views in the same space on an issue that matters. First time in the campaign this has happened. Let’s hope both candidates agree to debate on TV, cuz if either candidate refuses to debate no one should vote for him. Time for both candidates to respect the citizens of this state — and our intelligence — and share their views on real issues.
Of course FDR didn’t consider SS contribution to be TAX but investment into a retirement plan.
If we call FICA tax, then Social Security and Medicare become welfare for the elderly.
If as a society that’s what we want, then fine, but it means we pay what we can, not what is ‘earned’.
One cannot consider FICA a tax and also consider Social Security and Medicare retirement plans.
Ultimately Social Security and Medicare prove the failure of government.
Government was supposed to ‘hold the money’ for us as part of a retirement plan,
but, whoops, spent it instead.
I think that’s because both of them would reduce the deficit, to a great extent, by eliminating the recent tax cuts for the wealthy. If we eliminated those, and got unemployment back down to 5%, we’d solve most of the deficit problem.
I’ll stipulate that getting the unemployment rate back down to five percent can be done in the next several years. I’ll also be willing to imagine that the Senate will have the ability to pass any budget that reduces the deficit, but otherwise I’m interested in some math. “(T)o a great extent” may sound good but that’s just the deficit. How about the debt? Are you talking about entitlement reform?
All I’ve heard recently is criticism of others budget ideas (e.g. Ryan) and no action on Simpson-Bowles. Seems like any cuts will just be used somewhere else. Fiscal discipline comes in the second term, after a tax hike?
Once Hector and Marty get back to you with some ideas, pass them along to Sen Reid, he’s really been stuck on this.
Michael, I agree with your comments, however, getting the unemployment rate down will take a long time because it is driven by what the market needs. Businesses are not hiring as fast because there’s still uncertainty about the economy. And eliminating tax cuts for the wealthy (which I support) will only dent the deficit. (I can’t find the number at this time.)
Thanks for that link, GFA. I should have gone to the CBPP, but I forgot. It’s a good source.
both Heinrich and Balderas … avoided providing much detail about what to do about the federal budget and where they would make cuts
I think that’s because both of them would reduce the deficit, to a great extent, by eliminating the recent tax cuts for the wealthy. If we eliminated those, and got unemployment back down to 5%, we’d solve most of the deficit problem. (I wish I had a cite for that claim, but I don’t at this second. Sorry)
Just like yesterday with Heather Wilson, both Heinrich and Balderas just spouted off political talking points, and avoided providing much detail about what to do about the federal budget and where they would make cuts.
JerryLee, here’s another look at who pays federal taxes, an analysis by the reputable Center on Budget and Policy Priorites, entitled, “Misconceptions and Realities About Who Pays Taxes”.
http://www.cbpp.org/cms/index.cfm?fa=view&id=3505
Well JerryLee, 50% of workers are paying no federal income tax. They have no skin in any game …
Liar Liar Pants on Fire! (that’s my new Truth in Commenting policy in action)
First, your citation fails to support your claim. You cited source talks about the bottom 50% of income earners, not workers.
Second, even workers who don’t pay “federal income tax” still have skin in the game in the sense that they DO pay Federal taxes on their income. Even minimum wage workers pay FICA and Medicare, which add up to about 18% of their income in federal taxes on income (if you count the employer portion of FICA as part of wages, and ignoring those for whom the EIC reduces this rate). Compare that to Mitt Romney, who paid only about 15% overall on his earnings (including earned and unearned income).
http://firstread.msnbc.msn.com/_news/2012/01/17/10174817-romney-pegs-his-tax-rate-at-around-15-percent
Third, even those workers who don’t pay any federal income taxes may have skin in the game: consider an elderly person who is working as a part time greeter at Wal-Mart to supplement Social Security. They’ve paid into Social Security, they paid their money and bought their skin in that game – but their Wal-Mart income may be so low that they still don’t owe any federal income taxes.
Fourth, many or most of the people who don’t pay federal income taxes are the very poor, the elderly living on Social Security alone, and the disabled. I can’t really see that it’s a great idea to try to collect income taxes for dead broke elderly Alzheimer’s patients living inMedicaid funded nursing home.
What is the stratified breakdown of who pays taxes, and how much they pay?
For a comparison of the effective rate all federal taxes together by income percentile, see:
http://krugman.blogs.nytimes.com/2012/01/18/check-out-their-low-low-taxes/?gwh=AEE9DD707406BBE2AF655E311C35CE27
Here’s another view, with more detail but a bit less clear:
http://economistsview.typepad.com/economistsview/2012/01/should-we-feel-sorry-for-the-wealthy.html
Well JerryLee, 50% of workers are paying no federal income tax. They have no skin in any game about spending tax dollars so they are happy with anything if it involves spending they don’t pay for. Meanwhile, the rich pay the vast majority of taxes:
http://ntu.org/tax-basics/who-pays-income-taxes.html
But these two are comical. Tweedle-dee-dum and Tweedle-dee-dee, who can out liberal the other without saying anything of substance about the other. It’s like they have no competition and are running against the evil Repubs already. Oh, I know, they have different birthplaces and ethnicities. Big Deal.
“We cannot force American workers, the elderly, the poor and the sick to shoulder the burden alone while the wealthy get wealthier,” Heinrich said.
I agree – they shouldn’t have to shoulder the burden alone. Any analysis here? What is the stratified breakdown of who pays taxes, and how much they pay? The Heinrich quote is a steady drumbeat that is being presented across the Nation (and no, Heinrich didn’t think it up) and it rings like motherhood and apple pie … but is it true – are they really “shouldering the burden”? Who is it that is paying taxes under our tax structure?
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