It’s no
secret that most cities, counties, states and school districts in the U.S. are
facing big deficits. What is less understood is the extent to which austerity
cuts have become politicians’ bi-partisan response to the situation. The
dramatic measures being implemented in Portland, Oregon are no
exception.
By “austerity”
is meant a bag of policies intent on “reforming,” that is, reducing spending by
cutting jobs and public services, tearing up social contracts that workers have
benefited from, and, in general, making workers and the poor do all the
sacrificing to close budgetary imbalances. These austerity measures range from
potential cuts to Social Security and Medicare to cuts on a local level that go
after our schools, social services, parks, and
infrastructure.
While this
“sacrificing” is imposed on the vast majority of citizens, obscenely low tax
rates for big business and the wealthy are being left in place as their profits
swell and their dominance over the political system increases. To appreciate the
scope of this trend, one need merely note The New York Times report that there
are “nearly $1.1 trillion in annual deductions, credits and other tax breaks
that flow disproportionately to the highest income Americans and that cost more,
each year, than Medicare and Medicaid combined.”
The Case in
Portland
Portland’s newly
elected Democratic Mayor Charlie Hales has announced that there is a $25 – $40
million hole in the city’s budget. In response, he is demanding that all 27 city
bureaus submit budget proposals with 10 percent cuts. This latest round follows
several consecutive years of budget cuts.
The cuts already
put into effect have resulted in lost jobs, underfunded services and a decline
in Portland’s livability. While it is not clear yet how Hales will wield his
cleaver, he is signaling that his cuts will be the deepest yet. The programs
that he has already targeted — at-risk teen summer internships, job-training
efforts and youth bus passes, among others — will have an immediate impact on
great numbers of households, shifting the costs of these publicly funded
programs onto the shoulders of families that can least take the
burden.
The majority of
Portland’s residents can ill afford the costs of trying to close the deficit
without damaging the regional economy further. Portland’s unemployment rate is
7.9 percent. According to the Business Journal, 8.3 percent of Portland families
live below the poverty level; for families with children the number is 12.9
percent, and 27.4 percent for single, divorced and separated women. If he gets
his way, Mayor Hales’ austerity axe will continue to swing at the city’s most
vulnerable citizens.
Portland’s top
companies make hundreds of millions, if not billions, every year. In Oregon the
share of total state income collected by the wealthiest 1 percent increased by
70 percent from 1979 to 2009. In contrast, during that same period, the bottom
80 percent of Oregonians saw their income decline.
In 2009 the
highest effective state tax rate for corporations with profits over $10 million
was less than 1 percent. For a middle income Oregon household, the average
effective rate of payment was 4.1 percent.
If corporations
paid the same rate of state and city income taxes that is expected of most
citizens, there would be no deficit, no crisis, no need for cuts. Given the vast
amount of untouched revenue tucked away in these corporate coffers, Hales’ call
for public “sacrifice” to balance the city’s budget amounts to a shell game to
distract people from asking, “Where is the money?”
Portland is not
broke. The problem is that those with the money are being let off the
hook.
Special
Arrangements
In addition,
Portland’s city budget is far from transparent. It is divided into a General
Fund, which is where the so-called deficit is located, as well as Internal
Service Funds (ISF). ISFs are unrestricted net assets of the city. They can be
used for any purpose. The amount of money in this part of the budget has been
steadily increasing. In 2010-2011, the ISF balance was $120.6
million.
But rather than
using this money to benefit Portland’s working class communities, the City
Council keeps it stashed away for pet projects to lure wealthy investors to the
city. Since the ISF lacks transparency and accountability, it is difficult to
determine how the money in these funds is used; we only know that it isn’t
available when the tax paying public needs it.
Another way
Portland’s politicians stash away huge sums to benefit big business is through
the use of Urban Renewal (UR). UR requires that money be spent on development
projects in a certain area. The revenue created by this development, including
property taxes, remains locked up in the area for decades — from 20 to 50
years.
UR taxes in
2010-2011 amounted to $35 million for the city of Portland alone. These funds
can only be spent in the UR areas from which they were collected. Consequently,
while the posh UR area of Portland’s Pearl District enjoys more public funds
than it needs, elsewhere in Portland school closures are looming, streets remain
unpaved and infrastructure and park maintenance is done on the cheap, if at
all.
Put simply, UR
is a means of enriching developers and other corporate interests — like big
contributors to politicians’ campaign funds — to the detriment of Portland’s
working class communities. The fact that this model, which results in widening
inequality, continues to be pursued by those advocating cuts to public programs
could not make more clear where these politicians’ allegiances
lie.
While Mayor
Hales is blaming the city’s deficit on several factors, the math does not add
up. When low corporate tax rates, the millions kept in shady city funds, and the
revenue drain of development programs such as UR are taken into account, it
becomes clear that Portland’s deficit hawks are manufacturing a crisis in order
to continue arrangements where workers are left to pay for big business’
greed.
Our
Priorities, Our Budget
In addition to
the “I feel your pain” displays by Mayor Hales towards those affected by his
cuts, he will also employ the tactic of divide and conquer. Those threatened by
these cuts will be told the lie that raising revenue by taxing big business and
the wealthy is off the table. “The pie is only so big,” promoters of the cuts
moan, “you must decide your own priorities.” And in this way they hope to set
different communities and unions against one another.
It should be
clear, for reasons already discussed, how false this storyline is. While there
is likely more than a little padding in upper management that can be cut, and
plenty of taxes that remain uncollected, the truth is that a real solution to
Portland’s deficit won’t emerge until these priorities are confronted and turned
around.
What would a
budget that prioritizes peoples’ needs look like? Rather than job cutting, it
would fund job creation. Instead of slashing social programs, it would build a
thriving and accountable public sector. And corporate interests would take
second place behind the health of working class communities. A people’s budget
could easily be funded if the 1 percent paid their fair share in taxes and were
not given the driver’s seat in determining Portland’s development and political
policies.
To change
business as usual in Portland will require mobilizing an independent grassroots
social force to oppose Hales’ cuts and the corporate interests behind them. It
will take a unified Labor and community movement capable of expanding its goals
towards winning a people’s budget.
The demands to
unite such a movement must be those that the greatest numbers are willing to
mobilize behind. “No Cuts! Tax the Rich!” would be a good place to start. While
each union and community group has its own priorities, highlighting those which
build the broadest unity in mass campaigns and rallies is the best way to bring
these organizations’ specific concerns and struggles to the greatest
number.
With his
austerity cuts, Mayor Hales has issued a challenge to the grassroots. A unified
fightback is necessary to meet it. With such a movement it will be possible to
shift the political dialogue towards measures that serve the vast majority of
citizens. Without it, Portland will be left with Hales’ cuts and
worse.
At the same
time, a big fight is gearing up as Oregon’s democratic governor has threatened
cuts to public workers’ jobs and retirement benefits, on the tail of passing
emergency legislation to lock in Nike’s absurdly low tax rate for 30 years. In
building a citywide response, Labor and community groups will be strengthening
their capacity to take on austerity at a statewide level as
well.
Every city, county and statewide struggle against the corporate austerity attacks can set an example for and strengthen our ability to resist cuts to Medicare, Social Security and other socially needed federal programs. From this resistance a movement can develop with the ability not only to resist attacks — but to fight for and implement policies that benefit all working people.
MBH/ISH
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