fresh voices from the front lines of change







Senator Dick Durbin, Senate Majority Whip and one of President Obama’s closest allies, laid out his principles for a deal in the current fiscal showdown today in a speech at the Center for American Progress.  The nuanced speech was a revealing mixture of common sense and nonsense.   The good news is that Durbin, and perhaps the president, have moved far closer to the position supported by the broad base of the Democratic Party, and the vast majority of Americans.

A broad alliance has formed around the demand that any agreement begin with jobs and growth, end the tax breaks for the richest 2%, reject any benefit cuts in Medicare, Medicaid and Social Security, and protect programs for the most vulnerable.  Durbin’s speech suggests the mobilization may be having an effect.

Progressive Taxes:  Durbin sensibly insisted that any agreement had to include progressive tax reform, calling on the House to pass the president’s bill to sustain tax breaks for all income under $250,000 per family, and end them for income above $250,000.

Social Security:  Durbin explicitly joined Senate Leader Harry Reid in taking Social Security off the table in the negotiations, noting that it has not added one penny to the deficit.  He called for a separate commission to meet to insure that Social Security could project solvency for 75 years, saying it is too important to be at risk. (He failed to explain why concrete program changes should be made  now to fit 75-year projections that are inevitably massively inaccurate).

Medicare:   Here Durbin was both vague and slippery.  He argued that everything (outside of Social Security) should be on the table.  He explicitly opposed raising the eligibility age for Medicare and the Ryan plan to turn it into a voucher.  He argued that there were “savings to be had” in Medicare that “would not compromise benefits.”  The entire base of the Democratic Party is united in demanding no benefit cuts in Social Security, Medicare and Medicaid, but supports reforms to make the programs more cost effective.  Certainly there are savings to be made – such as enabling Medicare to negotiate bulk discounts for prescription drugs from the drug companies – without cutting benefits.

Medicaid:  Durbin argued that Medicaid was a “special case” because its recipients were among the most vulnerable, who have the hardest time getting their voice heard in Washington. He explicitly opposed the Ryan plan to turn Medicaid into a block grant and cut its support by one-third over time.  He didn’t argue, however, that Medicaid should be off the table, or insist on no benefit cuts for Medicaid.

Programs for the Vulnerable:  Durbin made the explicit case that domestic discretionary spending had already been cut by $900 billion over 10 years in the debt ceiling deal, and that more savings could be found in the military budget.  He argued that any agreement should be sensitive to protecting the safety net.

Jobs and Growth:  Durbin stated that any agreement had to be careful not to derail a faltering recovery that has already reduced the deficit by 30 percent as a percentage of the economy.  He warned that we were “testing the speed limits” in deficit reduction, having reduced deficits at a faster rate than any time since the demobilization after World War II.  He urged that any agreement on budget caps should have room for expanded investment in infrastructure, education, research and development and other areas vital to jobs and strengthening the economy.

This acknowledges the progressive position, but surely will shortchange the investments needed to put people to work.

The $4 Trillion Mirage:  Durbin embraced the arbitrary goal of a $4-trillion-dollar deficit-reduction deal over 10 years, without offering reason or logic for the position.

“We can get this done,” he stated, saying that a deal would leave America with the “strongest currency in the world.”  But the U.S. currency is already strong, with interest rates near record lows.  America is already viewed as such a safe harbor that investors are willing to collect less than the rate of inflation to hold their money in Treasury notes.  Markets are predicting slow growth and high unemployment, not vibrant recovery and inflation.  Arguably, the U.S. currency is too strong, with trade deficits once more rising to over $1 billion a day, costing jobs and slowing growth.

What’s Not on the Table:  Essential Reform

What we should be focused on is how to get the economy going – and the fundamental reforms needed to make it work for working families once more.  An arbitrary $4 trillion package of deficit reduction is at best irrelevant, and might well be counterproductive.

If we make the reforms we need, we can put our books in order, in part by generating jobs and growth.  Putting people to work in good jobs is the essential first step to deficit reduction.  To help accomplish that, we need to end the extreme inequality that saps the demand needed to make the economy work. So higher taxes on the rich, taxing investors at the same rate as wage earners, not only raises money but addresses a real obstacle to growth.

We need to curb the Wall Street gambling that blew up the economy, so a financial speculation tax would raise money and help essential reform.  We need to balance our trade, so a minimum tax on profits reported abroad, and an end to tax breaks for moving jobs overseas would produce revenue and needed reform.  We need to stop policing the world and start rebuilding America, so cutting the Pentagon budget to fit a lower profile generates both savings and needed reform.  We have to fix our broken health care system, so taking on the drug companies and insurance and hospital complexes that drive health care costs both generates savings and needed reform.

Sadly, other than the president’s sensible insistence that we not extend tax breaks for income over $250,000, none of these essential reforms is “on the table.”  Durbin said, “everything must be on the table.”  Yeah, everything but the essential.

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