On January 7, 200--two weeks before Barack Obama took the oath of office--the Congressional Budget Office forecast the federal budget deficit for fiscal year 2009 at $1.2 trillion. Now, the CBO is projecting the deficit will be only $642 billion for FY 2013, $200 billion less than the nonpartisan budget scorekeeper estimated as recently as February.

For policymakers in Washington, the implications couldn't be clearer. For starters, the counterproductive Beltway fixation on immediate debt reduction, which economists have warned is slowing U.S. economic growth and costing millions of jobs, should be jettisoned ASAP. And to be sure, the Republicans' next round of debt ceiling hostage-taking should be condemned as the economic sabotage it is.

The CBO explained why the U.S. fiscal picture is improving so dramatically:

If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $642 billion, CBO estimates, the smallest shortfall since 2008. Relative to the size of the economy, the deficit this year--at 4.0 percent of gross domestic product (GDP)--will be less than half as large as the shortfall in 2009, which was 10.1 percent of GDP...

CBO's estimate of the deficit for this year is about $200 billion below the estimate that it produced in February 2013, mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie Mae and Freddie Mac. For the 2014-2023 period, CBO now projects a cumulative deficit that is $618 billion less than it projected in February. That reduction results mostly from lower projections of spending for Social Security, Medicare, Medicaid, and interest on the public debt.

By 2015, the annual deficit is now projected to just 2.1 percent of U.S. gross domestic product, well below the 40-year historical average of 3.1 percent. The gap is expected to grow to 3.5 percent by 2023, "because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt."

The new CBO numbers are just the latest confirmation of House Speaker John Boehner's admission that "we have no immediate debt crisis." Coming on the heels of an analysis by the Hamilton Project estimating that austerity at the federal, state and local level has cost up to 2.2 million American jobs, the CBO report should help put to lie that more budget cutting is needed in Washington. As the New York Times explained just last week:

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What does it mean to be an American? What does it mean to be an American corporation? An article in the Wall Street Journal the other day should trigger questions like these.

WSJ: Domestic-Based Multinationals Hiring Overseas,

Multinational companies based in the U.S. boosted their global work forces in 2011 almost entirely by hiring workers overseas, underscoring the slow growth in the U.S. job market.

... The paltry hiring at home reflects where multinational companies are focusing their attention. Stronger economic growth in overseas markets in Asia and Latin America is driving their expansion, reinforcing their shift toward cheaper labor or closer access to customers.

The U.S. parents of multinational firms account for about one-fifth of total private U.S. employment. Since 1999, employment by U.S. multinationals is down by 1.1 million inside the U.S., while it is up by 3.8 million overseas.

The hiring by American companies is not happening in the U.S. At the same time these companies are holding $1.7 trillion of profits outside of the country, away from their own shareholders and our economy to avoid their taxes, while pushing to dramatically lower the taxes they pay us – and even to get out of paying any taxes at all on money they make outside of the country!

Why Do We Have Corporations?

Why do We the People even have laws that allow corporations and give them special benefits? The answer obviously is for our common benefit -- why else would we do it? The corporate form of a business enables the company to easily obtain capital from investors, in order to accomplish large-scale projects that benefit us. To encourage this we give these entities special privileges. For example, we limit liability which means the investors are not held liable for the actions of the company – they won't lose more than their investment if the company gets sued for some reason. We provide a system that helps them obtain financing, insurance, market liquidity and all kinds of things to help those investors get a good return on their money.

Benefit: We the People want railroads, but it takes a lot of money to build and operate a railroad. And our system wants private companies to do the work of building and operating railroads instead us just doing it ourselves. So we set up a way for a private company to gather investment from lots of people.

Why Do We Want "American" Corporations?

Why don't we just contract with any old corporation that comes along to get things done for us? Who cares what country these entities are from? Why should we as a country want to encourage and support our American corporations? Because American corporations make money for us. That is the whole point.

Other countries see themselves as countries, and compete with us as a country, for their benefit and the benefit of their people. As much as some of us might want a world in which we all cooperate and share and have "free trade" and other ideals and dreams, the fact is that other countries understand themselves as countries. Companies and industries located in other countries are operated to benefit their people. Their governments give them special benefits to help them compete with our companies. And then they are taxed so their country can have good schools and infrastructure and all the rest of the benefits of the modern world, for them.

And if we do not respond in kind, then their people end up better off at the expense of our people.

As long as other countries operate for the benefit of their people, it is our job to keep up our end of the bargain as it exists and operate as a country for the benefit of our people. This means that we support our companies, and expect them to bring the money they make back here, and share the returns with us.

We The People Used To Understand Who Is The Boss

We the People (used to) understand that these companies exist for our common benefit and (used to) expect certain things back from these corporations. We (used to) expect them to provide high-quality products and services and not engage in fraud and trickery. We (used to) expect them to provide a safe and fair work environment with good wages and benefits. We (used to) expect them to be good citizens that benefit the communities where they operate. And our laws and enforcement (used to) make sure they operated that way – for our common benefit.

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While there is good reason for progressives to fight like hell to protect cuts to Social Security, Medicare and other vital programs following the release of President Obama’s budget, we always seem to find ourselves on defense. It’s time to go on offense to protect vital services and benefits and to promote a more just economy by making sure that big corporations and the richest 2 percent pay their fair share in taxes.

For the past two weeks, Americans for Tax Fairness – a coalition representing more than 280 national and state groups co-chaired by the Center for American Progress, AFSCME and National People’s Action – has been stepping up pressure on Congress to raise $ 1 trillion, in part by closing corporate tax loopholes. We’ve been exposing a “Corporate Tax Dodger of the Day” leading into April 15 -- the always stressful “Tax Day.”



It’s not always the preferred topic -- raising taxes -- but let’s face it: millions of working families pay more in taxes some years, or pay a much higher income tax rate, than some of the biggest and most profitable corporations in America pay. Think ExxonMobil, General Electric, FedEx, Verizon, Wells Fargo and more. That’s wrong and I know I’m talking to folks who agree.

Today our coalition released a report that highlights a top ten list of companies screwing over the rest of us.

So where do we go from here? Let’s start with the release of President Obama’s budget. There were a lot of good things in Obama’s budget about taxes. He would raise more than $600 billion over the next 10 years from the richest 3 percent, mainly by limiting their tax deductions to the same rate as middle-class Americans. And he would close nearly $350 billion in corporate tax loopholes that go to companies that shift profits and jobs overseas, subsidize polluters, and coddle Wall Street.

Unfortunately, the President did not propose to use the savings from closing those corporate tax loopholes to protect Social Security or to reduce the deficit. Instead he has proposed that the money saved be plowed right back to corporations by lowering their income tax rate and by providing other subsidies. That’s unfair. And it’s just plain misguided.

Average Americans believe in fairness. Everything we care about -- healthcare, education, roads, public safety -- depends on a shared investment and everyone paying their fair share of taxes. That’s why our campaign isn’t just working inside the Beltway, we’re in communities and neighborhoods across the country.

Let me be blunt: We need your help. Now is the time for us to mobilize to make sure corporations pay up. On Tax Day our coalition will mobilize events in over two dozen states under the brand "WHO PAYS" that show how tax breaks for the rich and loopholes for corporations increase burdens on our families. Details of the events are online but even if there is not something happening near you, please join us and keep involved in this fight as it builds over the next few weeks.

Frank Clemente is a Campaign Manager for Americans for Tax Fairness.

Despite slashing the national debt by an additional $1.8 trillion over the next decade, President Obama's proposed fiscal year 2014 budget was received with two predictable talking points by Republican leaders. House Majority Eric Cantor, who previously complained about being called a "hostage taker," protested that "we ought to do so without holding [entitlement cuts] hostage for more tax hikes." His fellow debt-ceiling hostage-taker John Boehner echoed that sound bite, proclaiming "I would hope that he would not hold hostage these modest reforms for his demand for bigger tax hikes." But Boehner didn't end there:

"The president got his tax hikes in January; we don't need to be raising taxes on the American people."

Speaker Boehner couldn't be more wrong. As it turns out, Uncle Sam has a well-documented need for more tax revenue in the years ahead. And a big reason why is that between them, Presidents Bush and Obama cut taxes by more than the five times the amount of the combined new revenue hikes Obama got in January and is asking for now.

The chart above tells the tale. Leaving aside the new funding contained in the Affordable Care Act, President Obama is seeking $1.2 trillion in new tax revenue over the next decade. With the fiscal cliff deal in January, Obama got about $620 billion, or about half that amount. Individuals making over $400,000 a year (and households earning over $450,000) will see their income tax rate return to its Clinton-era level of 39.6 percent. The capital gains rate similarly will be reset at 20 (from 15) percent. In his FY 2014 budget proposal, the President has asked for another $580 billion by 2023, primarily by capping deductions for the wealthy at 28 percent, instituting the so-called "Buffett Rule," and ending tax breaks for the booming energy sector.

But Obama's $1.2 trillion in current and requested tax increases pales in comparison to the roughly $6.4 trillion he and George W. Bush will have drained from the U.S. Treasury between 2001 and 2023.

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The Obama administration on Friday lifted the covers on its compromise budget proposal for fiscal year 2014. While Obama's blueprint would slash the national debt by a projected $1.8 trillion over the next decade (bringing the total reductions since 2011 to $4.3 trillion) through painful changes to Social Security and Medicare, Republicans are predictably balking at Obama's call for $580 billion in new tax revenue. Despite the administration's up-front concessions on spending, GOP leaders including John Boehner, Mitch McConnell and Eric Cantor continue to repeat their talking points that "the President got his tax hikes in January" and "the discussion about revenue is over."

But as a quick glance at U.S. budgets past and future shows, the discussion over tax revenue should be far from over. For starters, thanks to two wars, the new unfunded Medicare prescription drug program and the government responses to the 2008 financial meltdown, federal spending surged over the previous decade even as tax revenue as a percentage of the U.S. economy hit 60 year lows. And looking ahead, the U.S. Treasury will need to raise revenues higher than the historical average not just to fill the massive hole left by the Naughts, but to fund $2 trillion more in war-related spending, to address the aging of the U.S. population and to meet the public's demands for more, not less, spending across almost every area of government.

Here are 10 reasons why Uncle Sam needs more tax revenue. (Click a link to jump to the details for each.)

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As the nation teetered on the edge of the so-called "fiscal cliff" in late 2012, Republican leaders warned that higher taxes for the rich would crush "job creators" and derail the U.S. economic recovery. But according to a new survey, a majority of those earning over $500,000 a year report that the new higher rates on income and capital gains have not impacted their spending, charitable giving or investment strategies. As it turns out, the Chicken Little conservatives could have spared themselves this embarrassment had they just heeded the lessons of American history and the predictions of the Congressional Budget Office.

Last fall, the nonpartisan CBO forecast the impact of "going over the fiscal cliff." As the chart above shows, CBO warned that the combination of the expiring Bush tax cuts for all Americans, the end of the temporary payroll tax holiday and the steep budget cuts of the sequester could catapult unemployment to 9.1 percent while slashing gross domestic product by 2.9 percent in 2013. But ending the Bush tax cuts for households earning over $250,000 a year, the agency assured lawmakers, would have virtually no impact (the 0.1 percent of GDP in light blue above) on the U.S. economy at all.

As CNBC reported last Wednesday, the CBO appears to have had it exactly right--at least so far. The GOP's dire predictions that upper-income Americans would "would spend less, invest less and give less to charity" have not come to pass:

The Shullman Luxury and Affluence Monthly Pulse found that 55 percent of people making $500,000 or more said higher taxes have not impacted their spending plans. Fully 61 percent of those making $250,000 or more said taxes have not impacted their spending plans.

On investing, 59 percent of those making $500,000 or more (and 64 percent of the $250,000-plus group) said higher taxes have not impacted their investment strategies. When it comes to charity, 55 percent of those making $500,000 or more, and 62 percent of those making $250,00 or more, said paying more taxes has not impacted their giving plans.

Of course, it's still early in the year. It's possible some of the well-to-do (that is, households earning over $450,000 a year) have not yet adjusted to the fiscal cliff deal that raised their income tax rate to 39.6 percent (from 35) and capital gains and dividend tax rate to 20 percent (from 15) in addition to the surcharges from the Affordable Care Act.

Possible, but unlikely. As the decades of U.S. history show, the American economy grew faster and produced more jobs when upper-class tax rates were higher--even much higher--than today. And as the data also show, lower capitals gains tax rates don't fuel greater investment, but instead greater income inequality.

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Now that Obama appears to be moving closer to letting the Republicans continue shredding the safety net he was elected to protect by adopting the very same austerity agenda that continues to fail so miserably across Europe, perhaps it's time to consider more of the consequences of that agenda. We already know what the sequestration bill Boehner shoved through Congress will do to hurt normal working families economically and about how it is likely to deprive as many as 750,000 workers of their jobs. That's what austerity is designed to do. By cutting back on social assistance to seniors and to the poor, the idea is that the wealthy-- who, after all, control the vast majority of the politicians-- will have to pay lower taxes. That is, and always has been, the basis for conservative politics.

Matthew O'Brien covers business and economics for The Atlantic and he assures us that the United States will "never, ever turn into Greece." He points out that there's no evidence that the U.S. is facing bankruptcy, insolvency or even a debt tipping point. Countries that borrow in a currency they control-- like the U.S., but not like Greece (nor like the "typical budget-conscious family" simple-minded Republican politicians are always urging the government to behave like)-- play under a different set of rules. They can never run out of money to pay back what they owe, since they can always print what they need as a last resort. That's not to say they actually do or should turn to the printing-press to finance themselves... [and] after all, inflation is a lot less bad than default for creditors... [C]ountries that don't have their own central bank, like euro members, can fall victim to self-fulfilling panics that push them into bankruptcy. In other words, markets force up interest rates because they fear default-- which then pushes them into default. It's a bank-run on a country."

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Back in 2010, Ohio Rep. John Boehner defied recent history and basic math when he comically denied that the Bush tax cuts enacted in 2001 and 2003 played any role in producing federal budget deficits ever since. Now in his refusal to countenance any new tax revenue to avoid the job-killing sequester, Speaker Boehner is peddling a new deception. Pretending to ignore inflation, population growth and the expansion of the American economy, Boehner is now claiming federal tax revenue is at a record high.

Speaking to Scott Pelley of CBS News earlier this week, Boehner said no tax increases could be part of any bipartisan plan to avoid the first $85 billion in cuts to discretionary spending beginning March 1. Why?

"The president got his tax hikes in January. The federal government will have more revenue this year than any year in our history. It's time to tackle spending. Period."

As he declared further talks on Thursday, Boehner once again declared, "The revenue issue is now closed." He added:

"How much more money do we want to steal from the American people to fund more government?"

Now, the $2.7 trillion in fiscal year 2013 revenue recently forecast by the Congressional Budget Office is, by a small margin, Uncle Sam's largest haul when measured in current dollars. But as a percentage of the total American economy (see chart above), federal tax revenues remain well below historical averages.

The handy CBO chart paints a pretty clear picture of Boehner's whitewashing. At less than 17 percent of U.S. GDP, federal revenue for FY 2013 is near historically lows. But that is an improvement over 2010, when the disastrous recession combined with the continuing drain from the Bush tax cuts slashed federal receipts to the 15 percent level not seen since the early 1950's. Meanwhile, the costs of two wars, emergency recovery measures including TARP and the stimulus, and counter-cyclical demand for food stamps, unemployment benefits and health care pushed Washington's spending to levels not seen since Ronald Reagan's first term. (It's worth noting that federal spending is almost flat since Barack Obama first took the oath of office, while the annual deficit has declined.) Contrary to Republican mythology that "tax cuts pay for themselves," it took five years for the Treasury to recover from the Bush tax cuts of 2001.

That last point is made clearer when taking inflation into account.

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At UC Berkeley, Robert Reich with the Mario Savio Memorial Lecture on Class Warfare in America.

This is the story of Bob the businessman.

Suppose a local businessman, let’s call him Bob, went around town raising money from the townspeople to open a car dealership. Dozens and dozens of people in town invested, putting in $1,000, $5,000, and a few putting in as much as $50,000 and $100,000. Bob raised a lot of money for his business.

After a while the investors found out Bob the Businessman was using some of their money to help his brother run for Mayor and several cousins to run for city council, and some of it to make his wife head of the Arts Council for a good salary. Then they learned that he was using some of it to fund a local organization that did nothing but push for tax breaks for . . . businesses just like Bob’s. (And to push for "deregulation" letting Bob use his company's money to do things like ... fund the organization.)

In the election his brother was elected Mayor and his cousins took over the council. Once in charge of the city, they pushed through a big contract for Bob to supply cars to the city (many of which the city didn’t even need.) The city also exempted Bob’s business from taxes, even giving it subsidies.

This all of course made the car dealership very profitable, and the investors started asking when they were going to get a dividend. But they found out that Bob’s business opened a subsidiary based at a post office box in the Cayman Islands. This Cayman Islands subsidiary had been buying cars from the manufacturer at wholesale and turning around and selling them to Bob’s parent company for just under what the dealership sells them to the public for. As a result, all the profits went to the Cayman Islands subsidiary, and Bob wasn’t bringing any of it back to distribute to the shareholders!

Next, the investors learned that Bob had been living really high on the hog, paying himself many millions of dollars.

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Last month, an analysis by Berkeley Professor Emmanuel Saez revealed that the top 1 percent of American earners captured all the income gains during the first two years of the current economic recovery while the other 99 percent lost ground. Now, a new analysis by Congressional Research Service analyst Thomas Hungerford is just the latest to show that historically low capital gains tax rates are "by far the largest contributor" to America's historically high income inequality.

As ThinkProgress explained Hungerford's findings, the upward spiral of income inequality (as measured by the Gini coefficient) between 1991 and 2006 is mostly due to federal tax policy that slashed rates on capital gains and dividend income, income which flows almost exclusively to the rich:

By far, the largest contributor to this increase was changes in income from capital gains and dividends. Changes in wages had an equalizing effect over this period as did changes in taxes. Most of the equalizing effect of taxes took place after the 1993 tax hike; most of the equalizing effect, however, was reversed after the 2001 and 2003 Bush-era tax cuts. [...]

The large increase in the contribution of capital gains and dividends to the Gini coefficient, however, is due to the large increase in the share of after-tax income from capital gains and dividends, and to the increase in the correlation of this income source with after-tax income.

Hungerford's table below provides a window into the rapid upward income redistribution underway over the last two decades. Between 1991 and 2006, the share of Americans' total income coming from wages and salaries dropped from 92 to 77 percent. During the same period, capital gains income almost tripled, catapulting from 5.4 to 15.6 percent. Unsurprisingly, "capital gains and dividends share appears to be pro-cyclical, increasing during the expansions and falling during recessions." (That is reflected in Saez' findings, which showed that the dramatic increase in stock prices from 2009 to 2011 drove much the winner-take-all payday to the top sliver of U.S. households.)

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