The Moral Question
Robert B. Reich

We dodged another shutdown bullet, but the next stopgap bill to keep the government going will run to Nov. 18. And their price for signing on to this one, Republicans say, will be more budget cuts.

Among other items, Republicans are demanding major cuts in a nutrition program for low-income women and children. The appropriation bill the House passed June 16 would deny benefits to more than 700,000 eligible low-income women and young children next year.

What kind of country are we living in?

More than one in three families with young children is now living in poverty (37 percent, to be exact) according to a recent analysis of Census data by Northeastern University's Center for Labor Market Studies. That's the highest percent on record.

Medicaid is also under assault. Congressional Republicans want to reduce the federal contribution to Medicaid by $771 billion over next decade and shift more costs to states and low-income Americans.

We're in the worst economy since the Great Depression -- with lower-income families and kids bearing the worst of it -- and we're debating whether to cut programs that people desperately need to get through it.

Most federal programs to help children and lower-income families are in the so-called "non-defense discretionary" category of the federal budget. The congressional super-committee charged with coming up with $1.5 trillion of cuts eight weeks from now will almost certainly take a big whack at this category because it's the easiest to cut. Unlike entitlements, these programs depend on yearly appropriations.

Even if the super-committee doesn't agree (or even if it does, and Congress doesn't approve of its proposal), an automatic trigger will make huge cuts in domestic discretionary spending.

Drastic cuts are already under way at the state and local levels. Since the fiscal year began in July, states no longer receive about $150 billion in federal stimulus money -- money that was used to fill gaps in state budgets over the last two years.

So far this year, 23 states have reduced education spending. According to a survey of city finance officers released last week by the National League of Cities, half of all American cities face cuts in state aid for education.

As housing values plummet, local property-tax receipts are down. That means even less money for schools. So kids are getting larger class sizes, reduced school hours, shorter school weeks, cuts in pre-kindergarten programs (Texas has eliminated pre-kindergarten for 100,000 children), even charges for textbooks and extracurricular activities.

Local family services are being cut or terminated. Tens of thousands of social workers have been laid off. Cities and counties are reducing or eliminating their contributions to Head Start, which provides early childhood education to the children of low-income parents.

All this would be bad enough if the economy were functioning normally. For these cuts to happen now is morally indefensible.

The wealthiest members of our society are richer than ever, taking home the biggest slice of total income and wealth in 75 years, and paying the lowest tax rates in three decades.

The president's modest proposals to raise taxes on the rich don't come close to paying for what American families need.

Marginal tax rates should be raised at the top, and more tax brackets should be added for incomes over $500,000, over $1.5 million, over $5 million. The capital gains tax should be as high as that on ordinary income.

Wealth over $7.2 million should be subject to a 2 percent surtax. According to an analysis by Yale's Bruce Ackerman and Anne Alstott, that would generate at least half of $1.5 trillion deficit-reduction target over 10 years set by the super-committee.

A tiny tax of one-half of 1 percent on financial transactions would generate an additional $200 billion a year, and hardly disturb Wall Street's casino at all. (The European Commission is about to unveil such a tax there.)

All this can be done, but only if Americans understand what's really at stake here.

When Republicans recently charged the president with promoting "class warfare," he answered it was "just math." But it's more than math. It's a matter of morality.

Republicans have posed the deepest moral question of any society: whether we're all in it together. Their answer is we're not.

President Obama should proclaim, loudly and clearly, we are.