Obamas Deficits Progressive Priorities Conservative Context

Robert Borosage

Poetry graces the speeches of Barack Obama. Few political leaders have his skill of telling the progressive story of America in a way that draws us together. His budget speech delivered at George Washington was exemplary, portraying an America of both rugged individualism and common purpose.

The president combined his defense of progressive governance with a pointed and clear critique of the preposterous Republican budget plan and its indefensible priorities.

He stood as Horatio at the bridge in defense of Medicare and Medicaid against the Republican plan, which would end them as we know it. All the blood curdling charts about mountainous deficits and debt, about trillions in “unfunded mandates,” are based almost entirely on soaring costs of a broken health care system that now costs two times per capita more than the average cost of systems in other industrial nations, with worse results. The president rightly indicted Republicans for failing to do anything about cost reduction (in fact making it worse by repealing the cost reforms passed as part of health care reform), and instead simply turning Medicare into a voucher with limited value while cutting nearly a trillion out of Medicaid, forcing the most vulnerable — seniors, the disabled, poor children, the deathly ill in nursing homes — to pay more for health care or go without.

Obama instead called for pushing for more reform, more of the hard work to police and curb rising health care costs. And he started by calling for allowing Medicare to use its purchasing power to gain bulk discounts for prescription drugs, a common sense measure now prohibited by current law.

In contrast to the Republican plan, the president insisted that deficit reduction come not simply from cuts in domestic programs, but from the defense budget also. He called for an ending the top end Bush tax cuts for the “millionaires and billionaires,” and opposed the Republican call for even more tax breaks for the wealthy. And he sensibly defended Social Security, noting that it does not contribute to the deficit and shouldn’t be part of the solution.

And the president forcefully flayed the utter folly of the Republican plan:

The fact is, their vision is less about reducing the deficit than it is about changing the basic social compact in America. As Ronald Reagan’s own budget director said, there’s nothing “serious” or “courageous” about this plan. There’s nothing serious about a plan that claims to reduce the deficit by spending a trillion dollars on tax cuts for millionaires and billionaires. There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill. And this is not a vision of the America I know.

Given the rumors and suggestions floated by administration spokesmen before the speech, many progressives were pleased by the speech. Those of us who mobilized to demand defense of Medicare, Medicaid and Social Security were particularly relieved.

The Conservative Context

But it is worth understanding just how conservative this debate has become — and how far the president has retreated. The most progressive president since Johnson has now embraced a center-right agenda — even before entering negotiations with the Republicans.

Keynes and Jobs: RIP

The president effectively announced the demise of a reborn Keynesian era that has expired before the economy revived. 25 million Americans are in need of full-time work. Home values are still sinking; gas prices are at $4 a gallon and rising. Consumer confidence is plummeting. Europe’s growth is slowing. But the federal government will join the states and cities in immediately cutting spending and laying off workers.

With this premature embrace of austerity, mass unemployment may become the new normal. Wages will remain stagnant. The concentration of wealth will grow and the middle class will continue to decline.

The president allowed that he was “sympathetic” to the view that we shouldn’t cut spending until the economy is fully recovered. But he embraced the conservative argument that “doing nothing on the deficit is just not an option,” because we could do “real damage to the economy” if we don’t “begin a process now.”

But mass unemployment and stagnant wages represent “real damage to the economy” that is here and now, not speculative. There’s no sign of the potential harm that might be caused by deficits in the sometime future. Interest rates are low; America has no trouble financing its debt. The president started down this path prematurely in 2009; now he has forced the pace.

Timidity on Common Sense Priorities

We spend almost as much on the military as the rest of the world combined. We’re spending more now in comparable dollars than we did at the height of the Cold War under Reagan — and that’s not counting the cost of the three wars we’re fighting. We’re running an arms race with ourselves, while exhausting resources policing the world. And the military is the largest swamp of waste, fraud and abuse in the federal government. Its books are in such bad shape that they can’t be audited. The Pentagon can’t keep track of what it has purchased, stored or used.

On the other hand, domestic discretionary spending programs, starved for funds for years, are already headed to levels of the economy not seen since Eisenhower. We have a growing infrastructure investment deficit in everything from transportation to clean water systems to a smart energy grid. We aren’t providing students with even the basics in public education. A college education is ever more needed and ever less affordable for more and more Americans. We are chronically short of cops on the beat in our regulatory systems, policing workplace safety, safe food, clean air, financial frauds. We should be increasing investment in these areas, not decreasing them.

Yet the president would cut far less from the Defense budget — $400 billion over 12 years — than out of the smaller domestic budget — $750 billion more over 12 years. He would cut less from the Pentagon than the amount recommended by his Deficit Commission co-chairs.

Income and wealth are more concentrated in America than any time since 1929 and the eve of the Great Depression. The richest 1 percent now captures about 25 percent of the nation’s income. Successive tax cuts since Reagan have lowered to levels not seen since 1931.

The wealthiest Americans now pay a lower tax rate, as Warren Buffett has attested, than their secretaries.

Progressive tax reform is long overdue. As Rep. Jan Schakowsky has proposed, we should be extending higher tax rates to millionaires and billionaires, raising the levels at least to those imposed during Reagan’s first term in office.

We should be taxing things we need less of — like financial speculation. A small financial transactions tax would raise more than $100 billion a year while slowing the computerized gambling that now dominates and destabilizes our markets.

Obama sensibly opposes extending the Bush top-end tax cuts and calls for reducing the deductions and loopholes that rich Americans armed with skilled tax lawyers can exploit. But his modest reforms get twice as much deficit reduction from cutting spending than from raising revenues. And the result is a requirement for deep cuts in domestic programs that we should be expanding.

Center Right Debate

Americans support progressive priorities. The most popular measure to reduce the deficit is the millionaire’s tax. They prefer cuts in defense to cuts in education. They want Medicare, Medicaid and Social Security protected. Jobs and the economy are a far higher priority than cutting spending. Indeed, the president’s greatest vulnerability in his quest for reelection next year will be mass unemployment and stagnant wages. “Where are the jobs” will be the Republican mantra in 2012 just as it was in 2010.

Yet, in Washington, we are having a center-right debate in a center-left nation. A reform president, taking office after the worst economic downturn since the Great Depression, has abandoned any new initiatives on jobs. Policing the world remains the bipartisan consensus priority over rebuilding America. The wealthiest will continue to pay the lowest tax rates since the 1930s, even as investments vital to our future are starved. And that’s before the president enters into negotiations with the Tea Party House majority.

The reasons for this retreat are clear. The wealthy and the corporations mobilized big time to protect their privileges. An elite consensus — congealed in part by conservative financing by Peter Peterson and others — has helped feed the hysteria about deficits. The conservative Mighty Wurlitzer and the Tea Party zealots have revived right-wing ideas that should have been discredited for a generation by the Great Recession. And money talks louder than ever in our elections, even as it grows more concentrated.

The only way out of this fix is for citizens to organize, for a movement to demand the common sense reforms the country needs and Washington avoids. When there was a bipartisan consensus around the wrongheaded war of choice in Iraq, citizens organized across the world to try to stop it — and then, having failed, mobilized to bring it to a close. Now that movement must come together again to call Washington to its senses, to defend the American dream, to put people back to work, and to make this economy work for working people once more.

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