America Needs to Stop Austerity

Ezra Klein reports that the federal deficit went down by 37 percent in 2013. The deficit fell to $680 billion. That translates into 4.1 percent of the GDP. In 2012, the deficit was 6.8 percent of GDP. Contrary to the supply side nonsense from Republicans, increasing taxes on the top income bracket and getting rid of the payroll tax cut (which Republicans supported) is a reason why there is more tax revenue.

Most of all, there was more revenue. Government receipts totaled $2.774 billion, up $325 billion from 2012, and rising to 16.7 percent of GDP from 15.2 percent. That reflects in part a stronger economy that increased income and payroll taxes. It also includes the expiration of a payroll tax holiday that increased tax receipts, and higher rates for upper-income Americans agreed to for this calendar year.

I support getting rid of the payroll tax cut and raising taxes on top income earners. The payroll tax cut. It endangers the Social Security trust fund and the Treasury Department had to pay the difference to make up lost revenue to the trust fund. It was neither fiscally wise or did much to stimulate the economy. A better way to help workers is to raise the minimum wage. It is shameful that President Barack Obama hasn't used his political capital to raise the minimum wage. Wages are not keeping up with cost of living. Mother Jones had these numbers for 2011.

Increase in real value of the minimum wage since 1990: 21%

Increase in cost of living since 1990: 67%

One year's earnings at the minimum wage: $15,080

Income required for a single worker to have real economic security: $30,000

Obviously, there has been no minimum wage increase since MoJo posted these numbers. Income inequality is a far more important issue than the federal deficit. Austerity could lead to long-term economic problems. You can't fund the government if the majority of Americans are overworked and underpaid.