Senate must block trickle-down tax cuts that deliver for millionaires while leaving millions behind – 16 News

The Greens are calling on Labor and the crossbench to block key elements of a terrible trickle-down Budget that spends big but spends badly, said Greens Leader, Adam Bandt MP, and Treasury spokesperson, Nick McKim.

The Greens said the Budget fails to invest in a green recovery to tackle the climate crisis, grow new industries and create jobs. The budget gives young people the finger and actively engineers a worse world for our children.

The Greens will also move immediately to overturn the Job Keeper cuts in the Senate on Wednesday. It would cost less to keep JobKeeper going until March 2021 than to bring forward the tax cuts by one year.

Greens Leader, Adam Bandt MP said:

“This is a Budget for the millionaires, not the million unemployed. Budgets are about choices and this budget chooses to prolong the recession, fuel the climate crisis and leave young people behind,” said Mr Bandt.

“Instead of a green recovery, this Budget is all brown and trickle-down. It spends big, but spends badly.

“Tax cuts mean nothing if you don’t have a job. They don’t stimulate the economy, but they’re two thirds of the government’s entire stimulus plan. We’re going into debt to pay for tax cuts for the super-wealthy.

“Millionaires get $2,500, the working poor get $250 and the unemployed get a kick in the teeth.

“Low-income earners’ tax cuts disappear after a year while the wealthy keep theirs’ forever.

“Instead of a genuine Jobs Guarantee that will deliver full employment and meaningful work in clean industries, the government has chosen high unemployment, low government investment and JobSeeker cuts. It will throw young people into cheap and insecure work, while locking in at least 6% unemployment for three years.

“Scott Morrison envisions a gas-powered future where 99% of companies get tax breaks but 2 million people don’t have enough work.

“We’re in a critical decade for climate action, but this Budget gives money to Liberal donors in the coal and gas industry, fast-tracks climate collapse and turbocharges inequality.

“The Greens are calling on Labor and crossbenchers to block the ‘tax cuts for millionaires’ package.

“We will be fighting these handouts to the super-wealthy with everything we’ve got, and we hope Labor joins us in the trenches instead of voting with the Coalition again.

“The Greens will immediately use our numbers in the Senate to overturn the JobKeeper cuts. We call on Labor and the others make the right choice and join us in taking on this terrible government.

“We may only get one chance to fix this recession. If we took this Budget’s approach during the Great Depression, we’d still be in it.”

Quotes attributable to Greens Treasury and Economic Justice spokesperson, Senator Nick McKim

“Josh Frydenberg has just given young people the middle finger,” Senator McKim said.

“With its investment in climate wrecking new coal and gas, its choice of high unemployment and the shovelling of billions of dollars into corporate welfare, this budget breaks the intergenerational compact.

“Scott Morrison has delivered $99 billion a year in handouts to big corporations while leaving millions in poverty and young people facing a climate crisis and a rigged housing market.

This money should be invested in public housing, renewable energy and high speed rail while delivering free childcare and health.

“This is a Budget for billionaires and big corporations. The government has failed to make big corporations pay their fair share of tax to help fund the recovery.

“They’re propping up zombie corporations, while dropping people on JobSeeker back into poverty. Failing businesses get endless compassion, but people out of work are on their own.

“We need a Green New Deal to get to full employment, tackle the climate crisis and reduce inequality.”

Source link

Will Morrison government learn from its Covid success or return to trickle-down economics? | Peter Lewis | Opinion

Reality constantly reminds us that the biggest risk the pandemic poses is to those who think it is less than it seems. From the White House to the safe house, this is a virus that locks on to system weakness and exploits individual arrogance.

The US presidential race is paralysed because one of the candidates believed he had the power to wish it away and let freedom reign, while countries like Sweden that chose to let it run are paying a higher economic cost than those whose governments swung into action.

Closer to home, Victorians have been living the repercussions of the previously unchallenged orthodoxies that you can outsource public safety and transform the care for our oldest and most vulnerable from a public service into a market.

It’s as if the virus is engaging in a real-time critique of the free market ideology that decrees big government is bad, taxes are a burden, caring for others is counterproductive and the market will always determine the best course of action.

As Kurt Anderson has outlined in his excellent new book Evil Geniuses, these assumptions lie at the heart of a political model ruthlessly promoted for the past 50 years by an organised cabal of wealthy industrialists, libertarians and the “useful idiots” they seconded to their cause.

Now, as the world thinks through a recovery to the pandemic’s shock, the Friedman model of trickle-down economics, deregulation and rabid individualism is finally coming under scrutiny.

This context takes centre stage as the Morrison government releases its delayed budget later on Tuesday. Like so much of what this government does, the plan has been broken into so many pre-packaged announce-ables that it’s hard to see a bigger picture. But there is one.

While there is no hiding the fact that the prematurely celebrated budget surplus is history, the levers the government is pulling seem geared to getting the economy back to where it was before the crisis hit. It’s business as usual with a deferred payment plan.

We caught this thinking in the government’s initial response to the forced lockdown: incentives for small businesses to invest in expansion when all they were thinking about was survival; incentives for home renovations when a new pagoda is the last thing on anyone’s mind.

These were textbook Freidman-inspired attempts to bookkeep our way through a downturn, giving business and individuals financial incentives to do things that were against their disposition. Unsurprisingly, they were undersubscribed and fell flat.

It wasn’t until the crisis prompted the government to put money directly into the pockets of those most vulnerable that the strategy began to work. Doubling unemployment support and providing struggling businesses with a Keynesian lifeline may have been anathema, but it got money circulating in a shocked economy.

The big question for today’s budget is: can the government can learn from these successes? Early indications suggest not.

The choices the government is making speak to a desire to go back to the way things were. Tax cuts for those in work over maintaining support for the most vulnerable. Co-payments to businesses to employ trainees rather than actually creating jobs in the caring industries or the public service. Further distorting the housing market with homebuyer grants rather than directly supporting much-needed social housing for low-income earners.

It’s part of a broader mindset that sees virtue in reversing promised wage increases to key public sector workers in the name of fiscal rectitude or pushing for further deregulation in workplace rights.

While the pandemic has disrupted the game, the strategy seems to be to get the old engine running again.

Indeed, the only real Australian policy challenge to the Friedman playbook over the past three decades – the creation of a worker-controlled, not-for-profit national pension scheme – is the one part of the economy that has been systematically and consciously drawn down and weakened during the pandemic.

But speak to the public and they don’t want a return to the old game, because it never really worked for them. Instead, and in overwhelming numbers, they would like to see the government take a different direction.

Which of the following options is closest to your view on the best way for Australia to recover economically following the Covid-19 pandemic?

As results in this week’s Essential Report shows, support for new approaches is broad and deep, crossing the normal partisan lines.

This is the faultline that could open up this week as the government and then the opposition unveil their economic plans for the next stage of the crisis. Back to where we were? Or building back better?

This is a simple economic choice. Is it enough to give the well-off a tax break in the hope they will spend a few dollars more? Or would a virtuous cycle of investment in social need – from social housing to early learning, from disability support to fixing aged care – give us the best chance of rebuilding.

And which of the following is closest to your view on the best way to create jobs and grow the economy?

Given the choice, the public wants public money directly invested in jobs rather than playing the tired old games of hit and hope.

This is more than just a debating point; it goes to the operating model that will define the response to a K-shaped recession, where the losers fall down further and winners keep on thriving.

Surely the challenge will become how to bridge the two axes, with policies designed to connect them and bring them closer together; not to penalise the winners, but to create a more inclusive economy and build the better post-Covid society that Australians crave.

Peter Lewis will discuss the findings of this week’s Essential Report with Guardian Australia’s political editor Kathrine Murphy at 1pm. Click here to join them

Source link

Trickle-down theory continues to feed the rich

Continuing his examination of archaic economic models, Professor John Quiggin looks at problems associated with the trickle-down theory.

OVER THE LAST FEW WEEKS, I’ve been looking at zombie ideas in economics. These are ideas that should have been killed by the evidence against them that has accumulated since the beginning of the 21st century and particularly the Global Financial Crisis. Yet they have remained influential and have made the pandemic catastrophe even worse than it would inevitably have been.

In previous instalments, I’ve looked at the Great Moderation (the idea that the economy of the early 2000s had reached a new and permanent state of stability), the efficient-market hypothesis (which stated that financial markets always make the best possible estimate of the value of any investment, public or private), and the Dynamic Stochastic General Equilibrium macroeconomic model, which combines the previous two.

All of these zombie ideas arose within the last 50 years and we can hope that they may one day be killed, once and for all. But some zombies, like vampires, are effectively immortal. One of these is what has been called “trickle-down economics”, the idea that if the wealthy are treated with respect and not attacked with punitive taxation, everyone will be better off.

This idea has been propounded throughout history by the priests and scribes whose job it is to protect the wealthy from dangerous ideas. It can be found in the Bible, in Aesop’s fables and in the earliest written records of all cultures — doubtless, it long predates writing. In the modern world, the job of priests and scribes has been taken over by the purveyors of zombie economics. Some of these are academic economists, but many more are employed by financial institutions, PR companies and lobbyists. And as long as there are wealthy people, there will be a ready market for trickle-down advocates.

The low point of trickle-down economics came during the decades after World War II. During the “Great Compression”, market incomes were more equal than at any time before or since.

A typical CEO in a major company made 20 times the salary of the average worker, compared to a ratio of 361:1 today. Inequality was further reduced by steeply progressive income taxes and other redistributive policies. 

Yet contrary to the predictions of the trickle-down theorists, the supposedly disastrous effects of taxing the rich never materialised. Productivity and output grew steadily and more strongly than in recent decades. Middle-class prosperity seemed to be the way of the future.

The economic crisis of the 1970s was not the result of progressive taxation or inadequate rewards for the rich. But it empowered the financial sector to demand ever greater rewards, which then flowed to top executives and business owners while the majority of workers, particularly in the U.S., experienced wage stagnation.

Throughout the decades of market liberalism, workers were promised that they would share in the benefits that flowed so lavishly to the one per cent. That claim lost all credibility in the global financial crises and the years of austerity that followed it, particularly in Europe.

But the pandemic exposed the failure of the trickle-down theory in a more dramatic and deadly fashion. Although the first Westerners hit by the disease were international travellers, once it became established through local transmission, the pandemic has hit the poor and vulnerable hardest. This is a familiar pattern: the crowded slums of previous centuries were notorious as breeding grounds for disease. And, as in the past, it has proved impossible to stop the virus spreading beyond the apparently expendable poor. The most notable example is Singapore, which seemed to have beaten the pandemic, only to have it reappear in the barracks housing the poorly paid migrant workers who do the jobs Singaporean citizens will not.

The same pattern has played out elsewhere. Austerity-driven cuts have left European health systems overloaded to the point of near-collapse. Even in Australia, where the pandemic has been contained, the casualisation of the workforce has made the economy more vulnerable to the shocks arising from the lockdown.

But by far, the worst disaster has been in the U.S. With low wages, an inadequate system of unemployment insurance and no general entitlement to sick pay, workers cannot afford to take time off. As a result, lockdowns have been patchy and only partially effective. There now seems little chance the virus can be contained in time to prevent over a hundred thousand deaths as well as massive economic damage.

Far from allowing wealth to trickle down from the rich, market liberalism has created an economic underclass from whose suffering all manner of ills spread through the entire population.

Professor John Quiggin is an Independent Australia columnist and an economist and Laureate Fellow at the University of Queensland. You can follow him on Twitter @johnquiggin.

Support independent journalism Subscribe to IA.


Source link