AltAusterity Digest #80 January 1-9, 2019

The new House rules package for the U.S. Congress includes a provision that requires all new spending to be offset with either budget cuts or tax increases. This “pay-as-you-go” rule is likely to undermine the ability of Democrats to pass progressive legislation including “Medicare for All”, a Green New Deal, or tuition-free public college by limiting deficits over the 10-year budget window. While an “emergency” designation can be attached to the legislation, as was the case with the 2009 economic stimulus package, the provision can otherwise only we waived by a majority vote of the House. The rules package will be voted on in the House on Thursday.

The United Teachers of Los Angeles (UTLA) have announced a January 10 strike date. One of the primary sticking points in negotiations is the Los Angeles Unified School District’s (LAUSD) proposal to privatize parts of the school system into a network operated by private charter management organizations. The so-called “portfolio model” has been used in New Orleans and Detroit with disastrous results. Some of UTLA’s counter-demands include reducing student-counselor ratios and lowering class size, as well as ending punitive disciplinary procedures that feed the “school to prison pipeline.” The LAUSD has 694,000 students in its schools.

As the tax debate heats up in the U.S., the Congressional Budget Office has projected that the Trump Republican cuts will bring the deficit past $1-trillion in 2020 With the Democrats now controling the House, NY representative Alexandria Ocasio-Cortez has called for increasing the tax rate on personal income for those earning over $10 million to 70%. The top marginal tax rate was at, or exceeded, 70% throughout the postwar era until 1981 when President Reagan reduced the rate to 28%. While some countries – most notably France and Britain – have experimented with a top personal income tax rate above 50% recently, they have had to back off due to wealthy citizens moving elsewhere or converting their earned income into investment income. While these liberal democracies have failed to increase the top rate, Sweden’s 70% top income rate has been highly successful.

Australia’s main public section union has called for the Labour Party to end the privatization of job-seeker services. The Labour Party announced this week that it intended to reform the “mutual obligations” workfare arrangement that requires job seekers to engage in activation programs to receive welfare benefits. The Community and Public Sector Union welcomed the Labour Party’s announcement but said it did not go far enough. The union wants the system to be renationalized, as the current JobActive system has been riddled with problems. The existing arrangement is set to expire in 2020, but the union is pushing for a complete overhaul before then.

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