On the campaign stump, I frequently talk about getting back to the good economic times of the 1950s and 1960s. Of course, I don’t want a return to the racial and gender discrimination of those days. But it was a significant period of shared prosperity in our history. When the economy grew, most people got ahead. Today we face the greatest economic inequality since the 1920’s – the very wealthy have seen their incomes balloon, while incomes have stagnated for middle- class families. And our current tax system only accelerates that inequality, particularly after President Bush’s tax cuts for the rich.
Gordon Smith has done as much as any member of Congress in running up the debt and skewing our tax system. Smith voted for all of President Bush’s tax cuts for the rich and powerful and some of his own, like a special tax break for multinational corporations that had profits stashed overseas. Gordon Smith’s one-year tax holiday saved companies billions, including $11 billion for Pfizer, and failed to create any of the jobs he promised.
It is time to take steps back towards tax fairness. Repealing Bush’s tax cuts for the rich would be a high priority for me in the Senate. But I would go beyond that to eliminate entirely the special tax treatment of the buying and selling of stock. Today, people pay a lower tax rate for buying and selling stock than they do on the money they earn at their jobs. In other words, if Warren Buffett makes an extra $5,000 on a stock deal, he pays a lower tax rate than a firefighter / nurse couple would pay if one of them got a $5,000 raise. Buffett himself thinks that's crazy and so do I.
When Senator Wyden asked me for ideas on how to reform the tax system, I told him: "Stop discriminating against income from work in favor of income from wealth." He has introduced a bill to do exactly that. Congressman DeFazio also supports that principle. In the Senate, I'd work with them both to pass that idea into law. The simple step of taxing income from capital gains at the same rate as income from wages would both help balance the budget and fight inequality.
In addition, we should look at the cap that exempts income above a certain level (currently a little less than $100,000) from Social Security taxes. Social Security itself, as a self-contained system, should be on sound financial footing for decades – but instead we’ve repeatedly used the money to pay for other programs. The limited shortfall in Social Security as the baby boomers retire could be easily dealt with by eliminating the (approximately $100,000) cap on income subject to the Social Security tax. I would favor partially offsetting that change with an income tax adjustment for people in the lower end of the above-the-cap range, e.g. those families earning less than $150,000.
And of course, I won't support tax holidays for multinational corporations that stash their money overseas - unlike Gordon Smith, who has proudly claimed that passing such a tax holiday was the greatest accomplishment of his ten-plus years in office. Instead, I'll support aggressive efforts to prevent massive corporations from artificially shifting income to ‘tax haven' countries through sham transactions. I believe huge corporations should pay their fair share in taxes for the public services they receive, just like the rest of us do.
Government Waste – What’s the Real Deal?
Politicians often claim they can save tons of money by cutting "waste, fraud and abuse" - but in fact, they have no specific ideas. Gordon Smith doesn't even bother to pretend that he's concerned about government waste: his Senate website doesn't have a single press release questioning a single item of government spending. And of course, he voted against investigating Halliburton's massive private contracts with Iraq. In the meantime, Gordon Smith has helped George Bush add $3 trillion to the national debt - a $10,000 charge to the credit card of every man, woman and child in America, which we'll all have to pay back.
In contrast, I fought real government waste in the State of Oregon by going after the State Lottery's outrageous giveaways to video poker retailers, which came at the expense of public schools. I helped lead advocates in a successful lawsuit exposing the fact that the Lottery had acted illegally in giving the retailers a sweetheart deal. The Oregon Court of Appeals said that the Lottery can only give retailers a reasonable profit, and must save the rest for schools and other vital services.
In the Senate, I'll fight wasteful projects like the International Space Station, which many scientists say has no true scientific value. We could find cheaper and more meaningful ways to conduct space research with Russia and our other Space Station partners. I'll also fight against contractual giveaways like the Iraq contracts with Halliburton and the Interior Department's sweetheart deals with oil companies.
In addition, I'll give federal agencies a real incentive to save. Everyone in government knows that at the end of the fiscal year, agency heads spend down their budgets, because they're afraid that if they don't they'll get less the next year. They buy new computers they might not need, spend money on consultants they could do without. It's probably not a huge sum of money, but it's real and it's wasteful. Former Washington Governor Gary Locke adopted a Savings Incentive Plan. Agencies were told that if they had money left at the end of the year, they'd get half of it back as an add-on to the next year's budget, to spend on customer service or new, innovative ideas. The other half went to a school construction fund. It is a great idea that the Federal government should copy.
Another expense in government today is the spiralling cost of health care. We know that other countries provide cheaper health care, with health outcomes that are often better than ours. We know that within the United States, the cost of treating the same condition can vary wildly, depending on where you are – with no relationship to outcomes. The government needs to get providers to follow the most cost-effective practices, encourage greater emphasis on primary care rather than 'specialists first,' and discourage overuse of expensive technology.
I won't pretend that we can balance the budget by getting rid of a few obvious examples of waste, fraud and abuse, because it's not true. Two-thirds of the budget goes to Social Security, Medicare, Medicaid, defense and interest on the debt - and no, the defense budget doesn't ALL go to Halliburton. But I will fight to root out the waste that is there.
And I also want to give the pubilc the tools to know where their tax dollars go. Polls show that we haven't done a good job of explaining to people that most of their taxes go to Social Security, defense, Medicare, Medicaid and interest on the debt. Most people believe, for example, that foreign aid costs more than Medicare. So I propose requiring that the IRS send every taxpayer a thank-you note after they get your tax return – and that the thank-you note explain where your taxes actually go.
