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Inequality and Infrastructure

1:47 pm in Uncategorized by ThirdandState

By Chris Lilienthal, Third and State

U.S. funding of infrastructure has declined dramatically since the 1960s, and Congress appears to be moving in the direction of even more cutbacks in the years ahead.

There is a bit of irony to this. With borrowing costs still very low and the market still somewhat depressed, now would be an ideal time for government to step up investment in infrastructure. In other words, it costs a lot less to build roads and bridges today than it might down the road if we hold off on the billions of dollars in needed repairs.

Sam Pizzigati laments this irony in a recent op-ed in The Star Ledger of Newark, N.J. And he has an interesting take on why infrastructure is getting short shrift: blame income inequality:

The cost of borrowing for infrastructure projects has hit record lows — and the private construction companies that do infrastructure work remain desperate for contracts. They’re charging less.

Yet our political system seems totally incapable of responding to the enormous opportunity we have before us. Center for American Progress analysts David Madland and Nick Bunker blame this political dysfunction on inequality.

The more wealth concentrates, their research shows, the feebler a society’s investments in infrastructure become. Our nation’s long-term decline in federal infrastructure investment — from 3.3 percent of GDP in 1968 to 1.3 percent in 2011 — turns out to mirror almost exactly the long-term shift in income from America’s middle class to the richest Americans.

Pizzigati notes that middle-class families rely on good roads and mass transit more than wealthy families, but the middle class tends to be weaker in unequal societies:

That leaves Americans with a basic choice. We can press for greater equality. Or spend more time dodging potholes.

PA Must Reads: The Payroll Tax Cut, Cuts in Block Grants for Local Gov and the State Use Tax

11:08 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The economic news in the past couple of weeks has been relatively positive so that must mean it is time for another down to the wire battle in Washington to help restore pessimism! At the end of the month, temporary extensions to the payroll tax credit and extended unemployment benefits will expire. With unemployment high, both measures should be extended through the end of the year.

Extending the Social Security payroll tax cut through 2012 would save a typical Northeast Pennsylvania worker at least $410 and probably more depending on where the worker lives, according to statistics released Tuesday…

The tax cut would cost about $10 billion a month, or $100 billion through the end of the year. Preventing the Medicare cut will require another $20 billion and extending unemployment benefits $45 billion, the Associated Press reported. The failure to extend the tax cut would cost the state 19,000 jobs, economist Mark Zandi has estimated, [Senator Robert] Casey said.

The Scranton Times-Tribune also reports on cuts in federal funding which are forcing local governments to cut back or delay infrastructure projects.

Boroughs and townships in Lackawanna County will find federal Community Development Block Grant funding harder to come by in 2012.

The county Department of Planning and Economic Development is anticipating another 10 to 15 percent cut in the CDBG funding available for projects ranging from sewer improvements to handicapped-accessible curb cuts in the 38 municipalities where it administers the money, said Michelle Giovagnoli, CDBG contract manager…

Ms. Giovagnoli said the county received just under $1.56 million last year, down about 15 percent from 2010. A similar cut this year would slash the 2012 allocation to less than $1.33 million. Fewer grant dollars means more projects, especially larger ones, will likely have to be funded over multiple years, she said. “We have to go into future years to fund the project, so it gets delayed because we don’t have the money to do it right away,” she said, citing a storm sewer project in the Nebraska section of Archbald and a sanitary sewer project along Main Street in Dickson City as examples.

The Patriot-News this morning reports the Commonwealth has given Amazon more time to “get their software up to par” in order that they might collect Pennsylvania’s sales tax. In the meantime, the Corbett administration is providing a handy table for consumers to figure out how much sales tax they might owe if they failed to keep track of their online purchases.

Amazon, which has a distribution center in the Carlisle area, is one of the largest online retailers that have resisted collecting sales tax. The Department of Revenue said Internet companies with facilities in the state will get a seven-month reprieve in collecting the tax…

There’s no such clemency for the common taxpayer. This year’s tax form includes a special line — line 25 — requiring citizens to pay “use tax” on items they purchased over the Internet for which no sales tax was charged.

The Corbett administration didn’t announce it would be aggressively collecting use tax until November. If the taxpayer failed to keep receipts for all purchases, the new tax booklet offers a handy table of estimated tax based on income.

A curious feature of that table is that the wealthiest pay a rate 25 percent lower than the poorest of Pennsylvanians. The sales tax is 6 percent. The estimates in the table assume a person making $30,000 a year would buy $200 in goods over the Internet; it therefore suggests $12 be paid in tax. For people who make over $200,000, however, the table offers a choice: use a percentage of income or $71, whichever is lower. If the rich-folks rate (0.03 percent of income) were applied to the person making only $30,000 a year, he’d pay $9 in use tax, instead of the suggested $12.

SOTU 2012: Community Colleges, Workforce Development, Taxes & Infrastructure

7:21 am in Uncategorized by ThirdandState

A blog post by Mark Price, originally published at Third and State.

The Pittsburgh Post-Gazette has a pretty good summary of the State of the Union.

Here is the full text of the President’s speech, and Wonkblog has a version of the speech with only what they define as specific policy proposals.

What follows are our favorites from the speech.

Community colleges and workforce development:

Join me in a national commitment to train two million Americans with skills that will lead directly to a job. My Administration has already lined up more companies that want to help. Model partnerships between businesses like Siemens and community colleges in places like Charlotte, Orlando, and Louisville are up and running. Now you need to give more community colleges the resources they need to become community career centers – places that teach people skills that local businesses are looking for right now, from data management to high-tech manufacturing.

I want to cut through the maze of confusing training programs, so that from now on, people like Jackie have one program, one website, and one place to go for all the information and help they need. It’s time to turn our unemployment system into a reemployment system that puts people to work.


But in return, we need to change our tax code so that people like me, and an awful lot of Members of Congress, pay our fair share of taxes. Tax reform should follow the Buffett rule: If you make more than $1 million a year, you should not pay less than 30 percent in taxes.


Building this new energy future should be just one part of a broader agenda to repair America’s infrastructure. So much of America needs to be rebuilt. We’ve got crumbling roads and bridges. A power grid that wastes too much energy. An incomplete high-speed broadband network that prevents a small business owner in rural America from selling her products all over the world.

During the Great Depression, America built the Hoover Dam and the Golden Gate Bridge. After World War II, we connected our States with a system of highways. Democratic and Republican administrations invested in great projects that benefited everybody, from the workers who built them to the businesses that still use them today.

In the next few weeks, I will sign an Executive Order clearing away the red tape that slows down too many construction projects. But you need to fund these projects. Take the money we’re no longer spending at war, use half of it to pay down our debt, and use the rest to do some nation-building right here at home.