How To Withstand Deficit Sticker-Shock

Isaiah J. Poole

(Updated 3 p.m. with Congressional Budget office figures and House Republican leadership response.)

This weekend’s news will be dominated by a Congressional Budget Office report that the federal deficit—already projected to exceed $1 trillion just a few months ago—is now projected to be as large as $1.8 trillion.

National Public Radio warned today that the higher deficit estimate “has the potential to change the political landscape for the Obama administration,” making it harder for the administration to pass an ambitious budget that includes a down payment on health care reform and urgently needed moves toward a green-energy economy.

And sure enough, House Republican Whip Eric Cantor, R-Va., rushed out a statement that said that “families cannot afford the price tag for misguided initiatives that are far outside the mainstream. Our current economic situation is not a crisis to be exploited to pass an agenda that will cost the American people trillions.” He held out the hope that “moderate Democrats” will work with the Party of No “to bring the President back to the center”—in other words, to the failed economic policies of the past.

The pushback against those on the right who will use this admittedly stunning number to argue against dramatic reforms has to be immediate and hard.

Laurie Weiner at Americans United for Change has circulated a set of talking points that people can use. The central point is that to revive the economy we cannot afford not to take on the challenges of health care, energy and education:

CBO deficit projections deliver a stark message that the economy is in even worse shape than we thought. It reinforces why it’s even more critical to pass the initiatives on health care, education and the economy laid out the President’s budget. The solutions must be adequate to match the depth of the problems. If we don’t deal with the major underlying problems with the economy and make it possible for job creation, our deficits will grow as far as the eye can see. We cannot achieve sustainable economic growth without fixing our broken health care system, reducing our dependence on foreign oil, and investing in tomorrow’s educated workforce. The President’s budget starts us down the right path and we cannot let the naysayers stand in the way.

  • President Obama’s transformative budget commits to major investments in health care reform, education and clean energy, while turning away from failed economic policies of the past. He restores fairness to our tax system, cuts taxes for 95 percent of Americans, takes steps to end our addiction to foreign oil, and moves us toward a rational health care system that both provides care and controls costs.
  • We have to invest in order to grow the economy, which will in turn create jobs. We’re in this hole right now because the previous administration didn’t focus on the right priorities that would strengthen our economy. We all know the first rule of holes: Stop digging. But our lopsided tax system, rising health care costs coupled with failed energy policies have made that it impossible.
  • One of the biggest drains on both individual, business and government budgets is the high cost of health care. We can no longer afford to wait. President Obama takes concrete steps toward improving health care coverage by laying out a way to pay for these reforms.
  • Additionally we will continue to grow our economy by investing in renewable energy technologies, which will end our dependence on foreign oil and create millions of clean energy jobs here at home.
  • Now is the time to take action. We cannot wait to move forward on any front. We can stop the economy from spiraling out of control but only if we take action for long term economic expansion.

This is not an either or situation. We have to move now on all of these fronts in order to combat the economic crisis. As President Obama said, Americans “don’t have the luxury of choosing to pay either their mortgage or their medical bills. They don’t get to pick between paying for their kids’ college tuition and saving enough money for retirement. They have to do all these things. They have to confront all these problems. And as a consequence, so do we.”

Our “Making Sense” page has other policy arguments that you can use, and we will be adding to them in the coming days.

We’ll have to use these arguments, not only in letters and phone calls to members of Congress, but in calls to the news media. The media—especially cable news—will sensationalize the outsized deficit, amplifying the so-called “fiscal responsibility” voices and giving short shrift to the progressive economists and policy makers who were right about the need for bold intervention in the economy and who warned that political timidity is the real enemy.

It is up to us to make sure that policy makers respond properly to the CBO report and that the media reports the full story.

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