As headlines of a monster of a storm bearing down on Florida early in the week and expectations of major revelations coming from another January 6th committee hearing captured most of the news consuming public this week, stories of another averted government shutdown barely got a mention.
Since the days of Newt Gingrich as Speaker of the House, Republicans have made headlines with their continuing threats to hold the national government hostage to their demands of their perception of fiscal sanity. That usually includes their “starve the beast” ideas of stopping any programs for the needy up to and including any food aid, Social Security, Medicare and Medicaid.
Republicans only do this when there is a Democratic President, as there is today, and they have the numbers in one or both houses of the legislature to stop what is known as continuing legislation. What Republicans have learned over the years is that their threats to stop the government is really unpopular since payments to many businesses for goods and services would stop despite contracts that guarantee payments.
A government stoppage in the US and subsequent non-payment of contracts entered into by the government (through legislation passed by congress) would cause severe financial disaster that could easily have been avoided. In short Republicans continually threat to cause a disaster if the rest of the country doesn’t bow to their hostage demands.
The senate passed resolution Thursday before the Friday midnight deadline. As I write this we are still waiting on the House to pass the continuing resolution. Even if they do, that resolution is only good until December 16th when the country will once again be subject to Republicans using the debt ceiling as hostage. Merry Christmas!
I bring this up to illustrate the chicanery that the radical right Republicans practice in the most basic of government functions, budgeting. As the country watched, hurricanes laid waste to first Puerto Rico (yes, it is a part of the US) and then Florida. As a country we have always stepped up through our national government to help repair disasters. Iowa got a big helping hand after the derecho in August of 2020 for instance.
But even here members of the radical right has closed their fists and tried to stop aid after disasters such as Hurricane Sandy hit New York only to put their hands out to ask for aid when their states are hit by a disaster. In this little budgetary game Iowa’s Chuck Grassley is a major player, continually voting ‘Nay’ for thee, but ‘Yea’ for me. Iowans must replace this kind of poor judgement.
So for Chuck Grassley the application of ‘starve the beast’ only applies to others and especially those in so-called “Blue” states. Members of Congress who play games with disaster relief need to go. Enough of that kind of chicanery. Disasters are disasters and shouldn’t be used as political opportunities to punch down on political opponents.
Another type of disaster that has led to political chicanery has been the ongoing pandemic and Kim Reynolds use of disaster funds from the federal government to balance her budget and give big tax cuts to corporations.
Iowans were treated to a headline this Thursday that Iowa’s governor for corporations, Kim Reynolds, will be cutting income taxes for corporations based on a budget surplus. What the article in the Des Moines Register did not explore is how the budget surplus came to be.
However in a similar situation about a years ago Laura Belin took a deep dive into how Iowa’s budget came about at bleedingheartland.com. To simplify Belin’s analysis, disaster money for pandemic relief stimulated the economy that created higher tax revenue that became a surplus:
OTHER PANDEMIC-RELATED POLICIES INCREASED STATE REVENUES
While the direct federal support to states has been extraordinary, the literally trillions of dollars that have been pumped into the economy in 2020 and 2021 have also bolstered state economies. Direct assistance to individuals and businesses, including the Paycheck Protection Program, enhanced and extended unemployment benefits, three rounds of economic impact (stimulus) payments to individuals, and advance child tax credit payments, helped the U.S. economy rebound from its induced hibernation related to the COVID-19 pandemic. Those funds helped keep people employed and active participants in the economy – which translates into taxable consumption and income.
Given that the vast majority of Iowa’s revenue comes from state sales and income taxes, that federal support was critical to its FY2021 surplus.
Iowa is hardly different from other states in its current experience. According to the NASBO spring 2021 survey, estimated total balances (states’ rainy day fund balances combined with general fund ending balances) for all 50 states reached $126.4 billion in FY2021, a new all-time high in nominal dollars, and 13.8 percent as a share of general fund spending.
Tomorrow Iowans will probably see yet another story about teacher shortages and other pressing needs in Iowa. Addressing those problems would seem a better use for revenues than giving more money to the class that already has plenty. The claim that giving tax cuts to the rich stimulates an economy has been disproven countless times since Reagan. Yet Iowa has leader who is out of touch with reality but quite in touch with her corporate masters. It is as if Reynolds was the middle man in turning federal money into corporate tax cuts.
And as a fitting end to this story let’s look at how new British PM Liz Truss threw financial markets into real tizzy by reinstalling the trickle down economics that everyone knows doesn’t work. It was already going to be a bad winter in England, Truss just made it incredibly worse.