Obama’s Budget: the Good, the Meager and the Ugly

Robert Borosage

President Obama’s budget, dismissed as “dead on arrival,” by Republicans in Washington, is widely described as a political document, designed to highlight the choices facing Americans this fall in dry budgetary numbers. The president presents Americans with a series of common sense propositions – all of which Republicans reject. Yet if the president captures high ground along the way, he leaves us, in the end, near the same uninhabitable place that conservatives would take us.

The common sense propositions proposed by the president include:

1. Priority to Jobs and Growth

With slow growth and over 20 million Americans still in need of full-time work, the President gives priority to jobs and growth in the short run, over austerity and deficit reduction. He calls for sustaining the payroll tax cut, extending unemployment insurance, funds to keep teachers and cops and fire fighters on the job, a relatively small $50 billion infrastructure boost, and a Jobs Corps for veterans. Republicans rail against the spending and deficits, although bludgeoned by bad poll numbers, they have acceded to extending the payroll tax cut.

2. A New Foundation for Economy

With no way back to the old economy, built on debt and bubbles, inequality and middle class decline, the President calls for creating a new foundation for sustainable growth – “an economy built to last.” So he calls for rebuilding our infrastructure, investing in science and technology, and new initiatives to train workers, educate children and make college more affordable. Republicans scorn these long overdue, and in fact inadequate steps, as “more spending,” and pronounce them dead on delivery.

3. Protect Basic Security

With Social Security in surplus and not adding to the deficit, and Medicare and Medicaid providing the most vulnerable with essential health services, the president sensibly protects the basic security programs. He would save money by allowing Medicaid to negotiate bulk discounts for prescription drugs. He trims some spending. He also pushes forward with health care reform, which contains several measures to help contain soaring health care costs. Republicans would repeal heath care reform and end Medicare and Medicaid as we know them, effecting deep cuts in the programs, leaving the most vulnerable to pick up the costs. Mitt Romney calls for cutting Social Security by raising the retirement age. Given that they won’t raise taxes or cut the military, Republicans have no choice but to carve deep cuts out of the programs that are an essential pillar of family security.

4. The Rich Pay a Fairer Share

With revenues to the federal government near record lows as a percentage of the economy (GDP), inequality at Gilded Age extremes, and the wealthy and corporations paying shamelessly low effective tax rates (as illustrated by Mitt Romney’s 14% rate, or General Electric paying nothing in taxes), the president would include progressive taxes as part of reducing our deficits. He would let the Bush tax cuts expire for those earning over $250,000, put a minimum tax of 30% on those earning over a million, tax the income from wealth at the same rate as the income from work for those earning over $250,000, close some corporate loopholes, ask the banks to pick up a small part of the tab for the mess they’ve created. Republicans, of course, have taken a blood oath to oppose tax increases on anyone at any time.

5. A Lid on Military Spending

With Bin Laden dead, al Qaeda dispersed, and troops coming home from Iraq and Afghanistan, the president proposes essentially to freeze core military spending over the next five years, and use the savings from ending the wars to invest at home and to help reduce the deficits. Republicans are divided on military spending, but most, led by Mitt Romney and Sen. John McCain, decry the freeze as irresponsible, and demand the military budget continue to rise.

6. Big Banks, China and the Law

With no serious investigation of or accountability from the big banks for the pervasive fraud that accompanied the financial wilding, the President calls for modest funds to augment attorneys and agents staffing the new investigative task force. With the trade deficit with China reaching simply obscene extremes, he also calls for funding a small trade unit to enforce our trade laws. Republicans, of course, want to repeal the bank reforms passed after the financial collapse. They, like Democrats, split over getting tough with China, but their leadership in the House blocks measures that would challenge Chinese currency violations from ever coming to a vote.

Help for jobs and the economy in the short run, investments vital to our future, asking the rich and the Pentagon to share in helping to reduce our deficits, doing something about holding banks and China accountable – this is just common sense. It is a testament to how extreme Republicans have become that they obstruct it.

No Way Out

But ironically, the president ends near up where Republicans are at the end of the day – in a place where the American Dream cannot survive. To get the deficit down to a sustainable level by 2020, the president and his Republican opponents would savage the domestic “discretionary” budget – spending on education, child nutrition, clean energy, job training, environmental protection, affordable housing, as well as the Justice Department, the FBI and more. In both the Republican House plans and the president plans, the entire domestic discretionary budget will be reduced to less than 2% of GDP. The poor will take the biggest hit, but the result will be devastating to our economic prospects.

Because Republicans won’t raise taxes on anyone and oppose cuts in the military budget, they have little choice but to lay waste to domestic programs and slash spending on Medicare, Medicaid and Social Security. Because he is prepared to advocate modest top end tax hikes and freeze the Pentagon’s budget, the President can protect these vital programs, but still must devastate domestic programs.

In fact these are the programs vital for reviving the economy and rebuilding the American Dream. One in two Americans is now in a low-income household. Only about one in three young Americans will complete a college education. Our decaying infrastructure not only hurts competitively, it costs lives.

If we want to compete globally with a high end economy and a broad middle class, we have insure that every child gets adequate nutrition, world class education, advanced job training and access to affordable college. We have to invest in science and technology, build a modern infrastructure, make the transition to clean energy and capture a lead in the green industrial revolution that will be the markets of the future.

A fierce argument can take place on how to do this – but it can’t be done on the cheap. And neither the president’s common sense nor the Republican’s inanity gets us close to where we need to go. Progressives have to challenge the limits of this debate — and that will take a movement.

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