Even deficit hawks are admitting that “starving the beast” was a bad idea:
I believe that to a large extent our current budgetary problems stem from the widespread adoption of an idea by Republicans in the 1970s called “starve the beast.” It says that the best, perhaps only, way of reducing government spending is by reducing taxes. While a plausible strategy at the time it was formulated, STB became a substitute for serious budget control efforts, reduced the political cost of deficits, encouraged fiscally irresponsible tax cutting and ultimately made both spending and deficits larger.
Once upon a time Republicans thought that budget deficits were bad, that it was immoral to live for the present and pass the debt onto our children. … Republicans also thought that deficits had a cost over and above the spending that they financed and that it was possible for this cost to be so high that tax increases were justified if spending could not be cut.
Sorry kids, we screwed up and it looks like you’re not getting schools either:
A recent American Association of School Administrators survey of 453 school districts in 45 states shows how bad things are. One-third of the districts are looking at eliminating summer school this year. Fourteen percent are considering going to four-day weeks (last year, just 2 percent did). Fully 62 percent anticipate increasing class size next year, up from 26 percent in the current school year. The teacher-to-pupil ratio, the AASA says, will rise from 15 to 1 to 17 to 1.
Nationwide, estimates of teacher layoffs range from 100,000 to 300,000, with some experts pegging the most likely number nearer the high end. Layoffs are likely to be hardest on the youngest teachers — “probably the most tech-savvy teachers we have,” says Rep. George Miller, the California Democrat who chairs the House Education and Labor Committee. Nor do many talented, young people elect to enter the profession, he adds, when the profession is shrinking.
But the $100 billion that the feds sent to the schools is largely spent, and no omnibus second stimulus looms. One problem with the current wave of deficit hawkery is that while it purports to be concerned with the nation’s long-term debt, its immediate consequence is to block spending that could speed the recovery and restore sounder financial footing. By defunding education, however, it endangers our short-term recovery and our long-term economic prospects. Not to mention the development of America’s children.
And the punchline is in one of the ways that taxes have been avoided:
There’s a lot of money to be made in charter schools, and I’m not talking just about the for-profit management companies that run a lot of these charter schools. It turns out that at the tail end of the Clinton administration in 2000, Congress passed a new kind of tax credit called a New Markets tax credit. What this allows is it gives enormous federal tax credit to banks and equity funds that invest in community projects in underserved communities and it’s been used heavily now for the last several years for charter schools. I have focused on Albany, New York, which in New York state, is the district with the highest percentage of children in charter schools, twenty percent of the schoolchildren in Albany attend are now attending charter schools. I discovered that quite a few of the charter schools there have been built using these New Markets tax credits. What happens is the investors who put up the money to build charter schools get to basically or virtually double their money in seven years through a thirty-nine percent tax credit from the federal government. In addition, this is a tax credit on money that their lending, so they’re also collecting interest on the loans as well as getting the thirty-nine percent tax credit…
…The problem is, that the charter schools end up paying in rents, the debt service on these loans and so now, a lot of the charter schools in Albany are straining paying their debt service- their rent has gone up from $170,000 to $500,000 in a year or- huge increases in their rents as they strain to pay off these loans, these construction loans. The rents are eating-up huge portions of their total cost.