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Wednesday, April 13, 2011

Issue of the Week: Ryan Uses Economic Lies to Protect the Wealthy

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Wisconsin Congressman Paul Ryan has put together his version of the 2012 federal budget, which, if enacted, would transform America into something that resembles a developing country more than the richest nation in the history of the world. His cuts would change America as we know it, all in the name of cutting the deficit.

Is it necessary to address the large budget deficits that America is currently running? Yes, but not when the economy is struggling with a very fragile recovery. The deficit, as every Economics 101 student quickly learns, can and should be addressed when the economy is moving into its boom cycle, not when it is struggling to come out of recession.

Unfortunately for America, Ryan keeps repeating the lie that raising taxes will kill jobs while cutting spending will stimulate job creation. It is just not true. But Republicans keep repeating it nonetheless. There is only one thing that creates jobs: demand for goods and services. Jobs are created when businesses start up or expand, and that only happens if there is demand for the product or service they provide. If there is more demand for computers, computer companies will expand and create more jobs. Whether the computer is bought by individuals like you, or whether the computers are bought by the public school system, the city for its accounting department or the state to keep track of hunting licenses, it all registers as demand for more computers, and new jobs are created. It doesn't matter if it is a private dollar or a public dollar that pays for the computer.

Ryan, who comes from a wealthy family and has spent his career serving the interests of the rich, continues to distort the truth to avoid the reality that we need to raise taxes on the wealthy as a major part of any deficit fix. When you cut spending to schools and local units of government, and they lay off teachers and firefighters, you cause a decrease in demand. Going back to the computer companies in the above paragraph, if someone loses a job, or the school district or local units of government have less money, they can't buy the computers. Computer companies eventually have to lay off employees and we begin to move back into recession. On the other hand, if you raise taxes on the wealthy, who spend little, if any, of their marginal income, the demand is barely affected.

So if you want to grow jobs, you don't want to reduce spending during a fragile recovery. Instead, increase government spending and deal with the deficit in a year or two, when the economy is much stronger. And when you do deal with the deficit, you must include tax increases for the wealthy. We can also fix the entitlement programs with some combination of innovation and raising the tax contributions of the wealthy. For example, Social Security, which is the greatest safety net America has ever created, could become solvent without cutting benefit checks. You simply need to raise or totally eliminate the cap on the maximum taxable earning amount for Social Security. Currently the maximum taxable earning amount for Social Security is $106,800, so the CEO earning $10 million a year pays the same amount of social security tax as a person earning $106,800. If we simply increase that $106,800 ceiling, or even eliminate it entirely, Social Security would be solvent into the next century without reducing benefit checks. Paul Ryan and his friends won't even put that option on the table for discussion.

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Guest House of Milwaukee Volunteers

Misfortune can hit any of us at any moment. That's why, since 1982, the Guest House (1216 N. 13th St.) has been providing shelter and services to individuals who have fallen on hard times.

In addition to providing necessities like food, showers and personal care items, the professional staff at the Guest House offers counseling, social services, employment training and referrals to affordable medical care. The Guest House relies on the help of volunteers—especially for meal services, since the facility has no kitchen. Once a month, Tanya Maney and her family prepare and serve dinner to Guest House residents—just one family making a huge difference in the lives of strangers.

Businesses, organizations and individuals who wish to help the Guest House in giving a hand to the less fortunate with donations of time or material supplies are urged to call 414-345-3240 ext. 111 or visit www.guesthouseofmilwaukee.org.