Making the case, on the economy…

Those who believe in investing in health care, education, and other vital services appropriately focus in the budget debate on the devastating impact of the specific budget cuts.

Those who oppose the revenues and taxes that are needed to find those programs generally make a broad anti-tax argument, often with an economic case. Witness many of the Republican Assemblymembers who spoke during the five hour+ debate on Sunday.

But the fact is, it’s the investment that helps the economy, and we should make that case more often. Noted academics Steve Levy and Manuel Pastor had an excellent Sacramento Bee op-ed that makes this very point.

In a recent study “Significant Side Effects: The Economic Impacts of Health Care Cuts in California Communities,” Health Access California (my organization) looked at just the health care cuts: and the comparison is stark. It finds that, due to federal tax deductions and matching Medicaid dollars, preserving California’s health care budget would have three times the positive economic impact as preventing an equivalent amount of increased taxes for upper income Californians.

In fact, the worst thing you could do for an economy is make health care cuts, which immediately translates to twice the impact just from the lost federal matching funds denied to our economy. There are also economic ripple effects, from lost jobs and wages, increased private health premiums, and more.

Money spent on health care immediately goes into circulation, through wages and vendors, which then gets recycled and multiplied in the economy. In contrast, an upper-income bracket tax impacts money that may be in the economy, or may simply be in the bank. Also, state income taxes are deductible on federal returns, which means that translates to be 35% less to the upper-income family, and in effect, more money in the California economy, courtesy of DC.

We need to forcefully rebut arguments that make economic claims about taxes without considering the economic repercussions of the cuts. Preventing the cuts is not just good for our health, but the health of the economy as well.

Cross posted at Calitics.

Health Access California promotes quality, affordable health care for all Californians.

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