Obama’s 2015 Budget: Waging Populist Fights in Strategic Retreat

Robert Borosage

President Obama’s 2015 Budget sets up many of the right fights with the right opponents.  Republicans who dismiss it out of hand – “most irresponsible budget yet” fumed House Speaker John Boehner – are exposed for what they are: defenders of privilege and entrenched interests against working Americans.  Yet, the good fights it sets up are waged within a continued long-term retreat.  It is like walking up an escalator headed down.

Why Not Common Sense?

Obama’s budget calls for a series of sensible reforms. He’d tax multinationals to fund the rebuilding of America’s infrastructure at home, putting Americans to work on good jobs that need to be done.  He’d expand funding for research and development, establish more manufacturing innovation centers, expand work on renewable energy, while ending the billions that go in subsidies to Big Oil, the most profitable companies in recorded history. He’d save money by reducing the size of the military and winding down the war in Afghanistan. He’d boost universal pre-school for American children, paid for by hiking taxes on tobacco. He’d both lift the minimum wage and expand the earned income tax credit to lift millions more out of poverty, and to reduce taxpayer subsidies to Wal-Mart’s billionaire owners.  He would pay for the EITC expansion by closing indefensible tax dodges, like the “carried interest” tax deduction for hedge fund billionaires.  He’d protect Social Security, and continue his efforts to curb the rapacity of health care insurance companies and providers.   He calls once more for comprehensive immigration reform that would bring millions out of the shadows, aiding growth and the economy, and thereby reduce deficits.

None of these common sense reforms is likely to become law.  Republicans march in lockstep to block closing loopholes for the wealthy and multinationals, to defend subsidies to Big Oil and Big Pharma, to bloat the military while denouncing the president for refusing to offer up cuts in Social Security, Medicare, Medicaid, food stamps, child nutrition, education and more.  They oppose extending unemployment insurance to the jobless, or raising the minimum wage for the working poor.  They will rail that poverty programs trap the poor, that a hike in the minimum wage will cost jobs, that taxing multinationals and the rich will slow the economy, that global warming is a hoax and Big Oil a solution.  And they will stop the reforms, even as they reveal who they are.

House Budget Committee Chair Rep. Paul Ryan dismisses the president’s budget as “an election brochure.”  Well, it damn well better be, because no matter what the president put in it, Republicans would pronounce it D.O.A.

This budget, as the president stated, frames the choice:  “Our budget is about choices. It’s about our values.  As a country, we’ve got to make a decision if we’re going to protect tax breaks for the wealthiest Americans, or if we’re going to make smart investments necessary to create jobs and grow our economy, and expand opportunity for every American. 

The Strategic Retreat

Progressives will stand with the president on that choice, as would most Americans if they believed it.  The president picks good fights against the right enemies.  Yet over the long-term, this budget remains mired within a deeply conservative and wrong-headed set of assumptions.

  •  America need more public investment, not less

The president makes the case for rebuilding our infrastructure and investing in areas vital to our growth, but his long-term budget is focused on reducing deficits, not on expanding investment.  The deficit, which has already fallen faster than anytime since the post-World War II demobilization crippling the recovery, is slated to decline to less than 2% GDP over ten years.  The domestic discretionary account – everything the US spends outside the military, shared security guarantees like Social Security and Medicare and interest on the national debt – is slated to decline to levels of the economy not seen since the 1950s.

This is a guarantee that, despite the rhetoric, America’s infrastructure  — the essential sinews of its economy – will continue to age and decline, growing more decrepit and more dangerous. It accepts that America’s children will continue to go without the basics in education – from universal pre-school to affordable college.   It accepts that we will continue to raise the highest percentage of children in poverty of any industrialized nation.

  • Corporations and the rich need to pay their fair share of taxes.

The president sensibly calls for limiting some tax breaks on the wealthy and corporations to invest in primarily in deficit reduction and some sensible reforms.  But he continues to argue that corporate tax reform should be “revenue neutral,” lowering corporate tax rates while closing loopholes.  In fact, multinationals have grown ever more adept at avoiding taxes. As Citizens for Tax Justice has shown, profitable Fortune 500 companies pay a lower tax rate at home than they do in other industrial countries.  With profits at record percentages of the economy and the richest few making off with virtually all the income growth in the society, we need progressive tax reform that raises resources to pay for the investments we need.

  • The U.S. Should Lead the Green Industrial Revolution, Not Just Clean Up After It

President Obama pushes for greater investment in renewable energy, greater controls on carbon, increased efficiency standards for cars, buildings and appliances.  But any real commitment to dealing with climate change, and to grabbing a lead in the green industrial revolution that is already sweeping the world has been beaten out of his budget.  His energy budget, for example, devotes $11.7 billion for nuclear security, mostly to maintain our nuclear weapons arsenal.  An additional $5.6 billion goes to clean up nuclear waste at Cold War sites across the nation.  In contrast, $2.3 billion is devoted to efficiency and renewable energy – solar, wind, geothermal and hydropower.  We’ll spend more maintaining a bloated arsenal of weapons we don’t need and won’t use than in capturing the renewable energies that will fuel the future. That means we’ll continue to pay rising costs for cleaning up after the catastrophes wrought by climate change.

  •  The zombie economy that exploded is back.

The president begins his budget statement, as he began his State of the Union, by boasting that ”After 5 years of grit and determined effort, the United States is better positioned for the 21st Century than any other nation on Earth.”

Well, the world is in dire straits, but the reality here is different:  the American Dream is haunted by a nightmare zombie economy that has come back from the dead

The old economy blew up in 2008, causing a global economic calamity.   The old economy was plagued by unsustainable imbalances – growing Gilded Age inequality and a declining middle class, increasing financialization and the devastation of manufacturing, unprecedented trade deficits, growing indebtedness, a decrepit infrastructure and starved public investment in vital areas, an unsustainable commitment to police the world, a purblind refusal to address increasingly destructive and costly climate changes.

President Obama managed to rescue an economy in free fall, while promising to find a new foundation for growth.  That effort clearly has stalled.  The old order stymied reforms and now revives to haunt us.  The rich capture even more of the national income.  The big banks are bigger and more consolidated than ever. The trade deficits remain over $1 billion a day.  Public investment remains starved.  The national security state continues to generate crises and consume resources and attention. Big oil even retains its subsidies. The unsustainable rise of costs in the health system have been slowed, but the system remains broken.

 Kutusov, if we’re lucky

Perhaps we should see President Obama as pursuing the wily course of Russia’s famous general Kutusov, who responded to Napoleon’s bold invasion of Russia by retreating back into Mother Russia, confident that the Russian expanse, its harsh winter and the survival needs of its peasants would eventually expose Napoleon’s troops and his folly.

Perhaps, by picking the right fights, revealing the Republican extremes, pointing the right direction even while in slow retreat, the president is exposing the right, exhausting their troops, and awakening Americans to meet the challenges of the day. As fanciful as that may be, it is much more plausible than expecting this budget’s long-term direction to take us where we need to go.

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