Tax breaks, thin newspapers, and fiscal cliffs, oh boy!

We are playing chicken with some very big problems, rather than getting on with some solutions.
Crosscut archive image.
We are playing chicken with some very big problems, rather than getting on with some solutions.

Entering what ought to be an uplifting mid-July week, I find myself suffering from topical depression. That is, every principal topic of discussion seems to lead to depression. Here is my working list, with the most important last.

State of the news media:  Monday morning's Seattle Times print edition provided graphic proof of what ails mainstream media. Faced with competition from new media, metro dailies everywhere are responding not with deeper and more serious coverage of
state and local issues — hard to find elsewhere — but are on a self destructive path toward ever lighter and more frivolous coverage. This leaves readers less informed about issues important in their communities and ultimately asking the question:  Why do I need this newspaper anyway?
More than half the space on the Times' Monday front page was consumed by huge photos and the beginning of a story about a Gig Harbor chainsaw artist who does interesting carvings of horses. More than half the space on the sports front page was consumed by a photograph and beginning of what is billed as a series of articles on columnist Steve Kelley's attempt at 63 to rehabiliate his golf game. Nearly half the space on the local, second-section front page was consumed by photos and a story about a jumping-dog competition in Mill Creek.

If you searched the rest of the paper you could find truncated versions of international and national stories covered in greater depth by the Wall Street Journal  and New York Times, a syndicated editorial column, a column by Seattle city councilwoman Jean Godden warning that the Seattle Storm women's professional basketball team should not be left out of plans for a new NBA/NHL arena, and a brief collection of local news stories. They've got to be kidding, right? 
Times economics columnist Jon Talton does day-in, day-out quality analysis and commentary on national, state, and local issues but is online more often than in print. Most readers probably do as I do, reading the Times online Monday through Saturday, for local coverage and blogs, and buying the print edition only on Sunday. 

Prediction: Seattle soon could be the largest market without any daily print newspaper.

Our crazy state tax code: Articles in Crosscut  and elsewhere locally invariably focus on ways to find new state and local tax revenues, or stress the need to make the present code fairer. I refer such authors to the report last month by the state Department of Revenue enumerating tax subsidies and loopholes extended to favored enterprises and sectors at state and local level. The report, required by law to be issued every four years, enumerates 640 such exemptions but focuses on those 452 which likely raise revenue if eliminated. Some $29.3 billion could be generated in the 2012-13 biennium if they were erased, the department report says.
New taxes? How about $29.3 billion in new revenues? Fairer taxes? How about eliminating some or all of these special tax favors, treating all business and all personal taxpayers the same, lowering rates for all, and thus generating greater economic growth and jobs and, in turn, fresh tax revenues? Would some enterprises be hurt by withdrawal of their tax breaks? Tacoma News Tribune columnist Bill Virgin points out that the abovementioned Seattle Times Co. would lose a Business & Occupation tax break, a sales-tax break on purchase of computer equipment, and a sales-tax exemption on sale of newspapers. 

The biggest beneficiaries, though, are heavy political hitters such as Microsoft and Boeing and they are the reason why the tax breaks' repeal is so difficult. Gubernatorial candidates Jay Inslee and Rob McKenna, like previous candidates, have pledged to review and then eliminate some of the breaks. Inslee, however, has proposed to enact several new ones.
Washington state, of course, is not alone in inflicting such abuses on its own economy and revenue base. The federal budget is chock full of equivalent subsidies. Faced with a long-term debt crisis, President Barack Obama and Republican and Democratic leaders of Congress have pledged their thorough review and the elimination of some — but not just yet.
The looming fiscal cliff: I detailed several months ago the financial and economic implications if White House and Congress reach the looming "fiscal cliff" at which they will arrive Dec. 31, unless action is taken before then to reduce federal deficits by other means. On that date, unless somethng happens beforehand, the so-called Bush tax cuts will expire, along with long-term unemployment benefits and anti-recessionary payroll tax breaks. Arbitrary spending cuts, split 50-50 between Defense spending and so-called discretionary (non-entitlement) spending, will kick in. 
Rep. Adam Smith and a small bipartisan group of House and Senate leaders are agitating on behalf of responsible congressional action before then. But the outlook is not promising. 

Ranking Democratic congressional leaders, including Sen. Patty Murray, have suggested publicly that Democrats should play "chicken" with Republicans on the issue and let the automatic cuts take place, presumably generating rage among voters against the GOP. I see this as a dubious premise. More likely, a plunge off the fiscal cliff would generate voter rage against leaders and candidates of both parties. President Obama has proposed that Bush tax cuts should remain in force only for families earning less than $250,000 annually, with everyone else getting what amounted to a tax increase.
Several updated projections are available regarding the fiscal cliff's effects on the economy. The consenus is that the combined effect of the post-Dec. 31 actions would be to cut U.S. GDP by 2 to 3 percent over the next couple of years. (The International Monetary Fund projected over this past weekend that U.S. growth in the year ahead would total only 2 percent, which means that the fiscal cliff's effects would be to erase growth entirely or put us back into recession).
All of this could have been avoided if Obama had embraced his own deficit-reduction commission's proposals in 2010 or if the congressional "super committee," co-chaired by Sen. Murray, had come up with proposals to avert the Dec. 31 crisis. Will we fall collectively off the cliff? The most likely outcome, instead, will be to resort once again to a "continuing resolution" which will postpone the mandated Dec. 31 changes from 90 days to six months — thus leaving a new Congress and a President Obama or Romney to deal with the matter. 

This will get us past year's end and spare sitting legislators from having to take unpopular actions before the November election. But financial markets will take a hit, voters will get a scare, and we'll shake once more the world's confidence that we can manage our own affairs more responsibly than the Greeks or Italians.

The cost of Afghanistan: We passed the 11-year mark last month of our intervention in Afghanistan. In that time some 2,000 Americans have been killed there, some $400 billion in our tax dollars spent, and 12,000 Afghan civilians killed. If we depart on schedule at the end of 2014, all signs point to a return of the status quo ante in that country with power sharing among the Taliban and regional tribes and warlords. Secretary of State Hillary Clinton declared in Kabul last week the provision of long-term, post-2014 U.S. aid to the present Afghan government. We may be spared from sending most of it since, in all likelihood, the present government will dissolve within months of our departure.
See what I mean about topical depression? And I've not even mentioned the sad plight of the Mariners.


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About the Authors & Contributors

Ted Van Dyk

Ted Van Dyk

Ted Van Dyk has been active in national policy and politics since 1961, serving in the White House and State Department and as policy director of several Democratic presidential campaigns. He is author of Heroes, Hacks and Fools and numerous essays in national publications. You can reach him in care of