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Roots of the Public Sector Budget Crisis

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This is a presentation by Labor Notes Director, Mark Brenner, at the New York Troublemakers School, May 18, 2013.

This is a presentation by Labor Notes Director, Mark Brenner, at the New York Troublemakers School, May 18, 2013.


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  • 1. Roots of the Public Sector BudgetCrisis?Mark Brenner, Labor Noteswww.labornotes.orgmark@labornotes.orgMay 18, 2013
  • 2. 4.0%5.0%6.0%7.0%8.0%9.0%10.0%11.0%12.0%13.0%1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012Understanding the Economic Crisis inFour Pictures - Picture 1Corporate Profits as a Percentage of GDP
  • 3. Understanding the Economic Crisis inFour Pictures - Picture 2Real Wages for Nonsupervisory Workers$0$5$10$15$20$251947 1954 1961 1968 1975 1982 1989 1996 2003 2010
  • 4. Understanding the Economic Crisis inFour Pictures - Picture 3Union Density10.012.014.016.018.020.022.024.026.028.01973 1978 1983 1988 1993 1998 2003 2008
  • 5. Understanding the Economic Crisis inFour Pictures - Picture 4Financial Profits as Share of All Corporate Profits0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%45.0%1948 1953 1958 1963 1968 1973 1978 1983 1988 1993 1998 2003 2008
  • 6. Wall Street Continues to Rake it In05101520253035401985 1990 1995 2000 2005 2010Wall Street Bonus Pool (Billions)
  • 7. Rising Inequality – CEO Pay toAverage Workers’ Wages0501001502002503003504001965 1973 1978 1989 1995 2000 2007 2008 2009 2010 2011
  • 8. Raking it InShare of U.S. Income Going to Top 10 Percent and Top 1%051015202530354045501928 1938 1948 1958 1968 1978 1988 1998 2008 2010
  • 9. New York is Worst of the Worst
  • 10. 1% ofPOP. 35.4% Wealth41.3% Wealth23.3% Wealth9% ofPOP.ofpopulationYear: 2010
  • 11. Shifting Burden off Corporations andonto Individual TaxpayersCorporate Taxes as a Percentage of Total Taxes0.0%5.0%10.0%15.0%20.0%25.0%30.0%35.0%40.0%1945 1955 1965 1975 1985 1995 2005 2010
  • 12. Shifting Taxes from the 1% to 99%State and Local Taxes as % of Household Income, 2010$10,700 $25,600 $42,900 $69,000 $118,100 $253,700 $1.3 millionAvg.IncomeLowest 20% Second 20% Middle 20% Fourth 20% Next 15% Next 4% Top 1%024681012US Average New York State
  • 13. Shifting Taxes from the 1% to 99%, ContdAverage Tax Rates for .01% (blue) and .1% (red)1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2009010203040506070
  • 14. Economic Toll on New YorkYear2009Budget Shortfall4.9 billion% of StateBudget17.2%2010 17.9 billion 38.8%2011 8.5 billion 15.9%2012 10 billion 18.2%2013 2 billion 3.4%Total 43.3 billion 18.7%
  • 15. How Have Shortfalls Been Closed?Spending CutsEmergencyFederal AidTaxes and FeesReservesOther45%24%16%9%7%
  • 16. 1% Agenda for Public Sector Medicaid “Redesign” and Other Cuts “Reforming” Pensions and Retiree Health Privatizing Services and Assets Raising Revenue with “Fee for Service” Tax Breaks and Corporate Giveaways toSpur “Job Creation”
  • 17. SourcesCorporate Profits as % of GDP: Calculated from the Bureau of Economic Analysis, National Incomeand Product Accounts, Tables 1.1.5 Gross Domestic Product, and 6.16A-D Corporate Profits byIndustryReal Wages for Non-Supervisory Workers: Calculated from Bureau of Labor Statistics, SeriesCEU0500000008 (Average Hourly Earnings for Production and Non-Supervisory Employees) andCWUR0000SA0,CWUS0000SA0 (Consumer Price Index for Urban Wage Earners and ClericalWorkers)Union Density: Calculated from Current Population Survey by Barry T. Hirsch and David A.Macpherson, http://www.unionstats.comFinancial Profits as Share of All Corporate Profits: Calculated from the Bureau of EconomicAnalysis, National Income and Product Accounts, Tables 6.16A-D Corporate Profits by IndustryWall Street Bonus Pool: Report from NY State Comptroller, February 26, 2013Ratio of CEO Pay to Average Workers Wages: from Economic Policy Institute, State of WorkingAmerica, Table 4.43 (view on web)Share of US Income Going to Top 10% and 1%: Emmanuel Saez and Thomas Piketty, "IncomeInequality in the United States, 1913-1998", Quarterly Journal of Economics, 118(1), 2003.(Updated to 2011 from authors website)New York Income Distribution: Graphic from The Nation, May 6, 2013, Source: Fiscal PolicyInstitute, based on Pilketty and Saezs top 1% income share for the US and FPI analysis of NYSDepartment of Tax and Finance and Division of the Budget data for NYS and NYC top 1%income share, 2010-2012 projected. View onlineWealth Distribution: Edward N. Wolff, “The Asset Price Meltdown and the Wealth of the MiddleClass” New York University, August 26, 2012 (view online)
  • 18. Sources, Cont’dCorporate Taxes as % of Total Taxes: Calculated from data compiled by Brookings Institution, TaxPolicy Center, “Historical Amount of Revenue by Source (online here)State and Local Taxes as % of Household Income: Institute for Taxation and Economic Policy,“Who Pays? A Distributional Analysis of Tax Systems in All 50 States. January 2013 (availableonline)Average Tax Rates for .01% and .1%: Thomas L. Hungerford “Taxes and the Economy: AnEconomic Analysis of the Top Tax Rates Since 1945,” Congressional Research Service,September 14, 2012, data provided by author.Cumulative Budget Shortfall in New York: Phil Oliff, Chris Mai, and Vincent Palacios, “StatesContinue to Feel Recession’s Impact” Center for Budget and Policy Priorities, June 27, 2012(available online)How Have Shortfalls Been Closed?: Elizabeth McNichol, “Out of Balance: Cuts in Services HaveBeen States’ Primary Response to Budget Gaps, Harming the Nation’s Economy” April 18, 2012(available here)

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