Let the Budget Wars Begin!

by on April 14, 2011 · 16 comments

in Economy, Popular

It’s ‘go’ time!  The gauntlet has been thrown down, and the posturing has begun.  Where will it ultimately take us, we don’t yet know, but we can certainly hope that the recent past is not prologue, and if what we saw yesterday is any indication, then we’re in for one helluva fight in the next year-and-a-half.  And it’s a fight that Democrats have been itching for ever since the right wing ideologues seized control last November of the Republican Party.

But perhaps more importantly, we’re going to get a good, hard, in depth look at the sense and sensibility of the American voters.  Just how smart are we?  Are we really gullible enough to believe that we can once again achieve American prosperity simply handing out trillions of dollars in tax breaks to the wealthiest two percent in America while increasing the burden on seniors and the disabled?  Or do we rebuild the American economy by fortifying and expanding the middle class; by creating greater opportunity for more people to achieve?

Are we a nation to be ruled by the wealthy elite, or are we a representative democracy with core principles such as “government of the people, for the people, and by the people?”  Are we a nation that believes in pixie dust and unicorns, or do facts and reason rule the day?

President Barack Obama stepped to the podium and presented his outline for the budgetary future of the United States yesterday in front of a large audience at George Washington University in Washington, D.C.  His sketch outline (it’s not really fair to call it a plan, since there were few real details presented) was full of logic, and based on the reality of our economic situation.

And the situation is this, as presented in Obama’s speech (read the entire text here):

Around two thirds of the total budget is accounted for by Medicare, Medicaid, Social Security, and national security.  Programs like unemployment insurance, student loans, veterans’ benefits, and tax credits for working families take up another 20%. What’s left, after interest on the debt, is just 12 percent for everything else. That’s 12 percent for all of our other national priorities like education and clean energy; medical research and transportation; food safety and keeping our air and water clean.

Up until now, the cuts proposed by a lot of folks in Washington have focused almost exclusively on that 12%. But cuts to that 12% alone won’t solve the problem. So any serious plan to tackle our deficit will require us to put everything on the table, and take on excess spending wherever it exists in the budget.

Taxes are on the table.  Medicare and Social Security are on the table.  Military spending is on the table.  What we’re talking about is a comprehensive approach that asks everyone to ante up.  As opposed to the Republican/Ryan plan that attempts to close the deficit and budget gaps by further cutting taxes on the wealthy and increasing the burden on the middle and lower class, particularly the elderly.

Republican lawmakers are already hooting and hollering about the notion of asking the rich to pay their share.  House Speaker John Boehner has insisted that any proposed tax increases will be a non-starter as far as he and his Republican caucus is concerned.  Paul Ryan called the speech “excessively partisan.”  And as one Talking Points Memo headline read, “GOP:  Obama’s Speech So Partisan We’ll Never Reach Budget Agreement.”

Republicans continue to insist that they can magically close the deficit and eliminate the debt by slashing and burning that remaining 12 percent.  And they continue to insist that the only way to solve our problems is to keep cutting taxes, telling us that by lowering revenues, they can actually increase revenues.  But the math simply doesn’t add up.

We currently have the lowest tax rates since the Great Depression.  And as I pointed out in a piece I wrote here, it is the Bush tax cuts that are the biggest contributors to our exploding debt and deficit.  President Obama pointed out in the speech that not only do we have the Bush tax cuts that went unpaid for, we have two wars that were unpaid for and a Medicare prescription drug act that went unpaid for (all by Republican legislatures and a Republican White House).  If you want to know where our current debt and deficit come from, look no further than that.

Republican lawmakers demand that increasing taxes will devastate the economy.  There’s just one problem with that meme:  Bill Clinton increased taxes in the 90’s, and it led to one of the most prosperous times in our country’s history, and a sizeable budget surplus.  Clinton’s presidency also saw the creation of over 20 million jobs.  George Bush implemented record tax cuts, and look where we are now.  Bush, by the way, presided over an economic period that created less than one million jobs in his eight years in the White House.  So who’s more credible?

It’s more likely that a modest increase in taxes on the richest two percent–bringing them in line with where they were during the Clinton era—will not have an adverse affect on job growth.  Ending the Bush tax cuts alone will lead to a closure in the budget deficit of $1 trillion over the next 12 years.

Our economic problems are not going to be solved overnight.  A long term, balanced approach is what’s called for.  But there’s only one side of this debate that’s willing to take such an approach, while the other side has offered nothing but fairy tales and an opus to the rich and powerful.   What we need is responsibility, not rhetoric.

The real problem, of course, is that Obama has started from a position of extreme reasonableness, while Ryan and his contemporaries have offered up a plan that dismantles America as we know it.  Now, it’s safe to assume that neither proposal will be adopted in its entirety (we KNOW the Ryan plan won’t, as it’s being derided by Democrats and Republicans alike as totally irresponsible).  But since Obama is starting from the middle, and the Republicans are starting from the extreme fringes of the far right, how far to the right will Obama move?  And how do the Democrats stop him from compromising too much?

But even more importantly, will the American voter continue to allow themselves to be snowed over by the fiction being peddled by the Tea Party, and by default, the entire Republican platform?

avatar thinking out loud April 14, 2011 at 5:29 pm

17 % unemployment says it all…..4 million due to loose benefits like the 2 million that already have ….that sums it up.

avatar annagrace April 14, 2011 at 7:24 pm

The Republicans have really brought us jobs, jobs, jobs, haven’t they?

avatar Andy Cohen April 14, 2011 at 11:18 pm

Priceless!!! Great find!

avatar Dave Rice April 15, 2011 at 8:23 pm

Chairman roflMao says that’s some funny shit! Is that for real, Anna?

avatar jettyboy April 14, 2011 at 7:47 pm

To think Obama and the Democrats won’t cave to the republican controlled sound bites and their ability to control the talking points for the media, all you have to do is look at recent history like the last 2 or 3 years to know the out come will be more capitulation by the spineless.

avatar Andy Cohen April 14, 2011 at 11:16 pm

And that’s what concerns me. There really is no room for negotiation, but you just know they’re gonna give ground and give the Tea Baggers a lot of what they want, which will only have the effect of pulling this country further to the right. We can only hope that Obama and the Dems grow a pair between now and the 2012 election. The fact that there’s now a counterbalance to the official Republican Broadcast Network that’s only too happy to call them out on their nonsense will certainly help.

avatar dave rice April 14, 2011 at 8:05 pm

As always, excellent piece Andy. My only gripe – I’ve got a strong suspicion that many of the 20 million jobs allegedly created under Clinton were of the low-paying, service type that would hardly pay a living wage if one person were to take on two of them. Then again, I’m also assuming that most of the comparatively paltry 1 million created under Bush were in the same vein…

avatar tj April 15, 2011 at 8:03 am

Pandering to the countries mostly greedy 1% – has gotten way out of control.

Since Clinton sold us out (Gramm/ Leach/ Bliley Act, NAFTA, PNTR, etc) – even the Democrats are pandering to the Wall Street Thugs & Corporate Job Exporters.

The greedy rich don’t care about anyone but themselfs.

Our misplaced priorities (as a nation) worship success (with little regard how it was achieved) – not integrity, fairness, & compassion.

Who “needs” – $10’s of millions to $10’s of billions?

Selfish devils.

avatar RB April 15, 2011 at 8:08 am

So the President spends a week constructing a budget plan after the Ryan plan was proposed. So the President gives a political speech attacking the Ryan plan. So the President ignores his own debt commission during the start of his re election campaign.
None of this is reform. None of this is change. None of this is real debt reduction.

How about ending the wars or proposing a end date for withdrawal? Is there any more wasteful government spending than these military actions? How about talking about the bipartisan plan? Both the Obama plan (speech) and the Ryan plan are just politics as usual.

avatar The Mustachioed OBecian April 15, 2011 at 10:35 am

I’m not so sure the Ryan plan lowers taxes on the rich, rather it maintains their current tax structure since it is presently written into law that taxes will increase for everybody in 2013. So, if you compare it to current law, which I’m guessing was not really the intention of this article, then it would be considered a tax cut. If you compare it to what current rates are, then the rate stays static. And while it’s easy to rail against Bush’s tax cuts, the supposition of the argument is that this money is the government’s to begin with, not the individual’s. If that is from where you argue, then come out and say it. It’s a bit difficult at this point to argue for one in place of another since there is only one plan that is public, and that is Paul Ryan’s, making it an easy target. However, taxing the rich and cutting defense spending is not a panacea for our deficits. Difficult choices will have to be made. And that includes entitlement spending. Otherwise, our starting point will be the budget that the administration just released and has since relegated to the ashbin of history as a complete joke.

avatar annagrace April 15, 2011 at 10:56 am

Actually there is another budget being presented in the House today by the Progressive Caucus, and it is called the People’s Budget. The mainstream media falls all over Ryan’s plan and has not given any attention to this one which actually shows a surplus by 2011, reduces military spending, safeguards social security, medicare and medicaid and creates jobs. You can read the People’s Budget here:

avatar The Mustachioed OBecian April 15, 2011 at 12:32 pm

That reads like something from the Politburo. I’m pretty sure it’s not meant to be taken seriously.

avatar Andy Cohen April 15, 2011 at 12:35 pm

No more seriously than Paul Ryan’s budget that actually increases the debt and deficit in the first 10 years, and decimates healthcare and our ability to pay for it.

avatar JEC April 15, 2011 at 3:44 pm

Something from the Politburo – a quip yes – could you please explain – I’m missing the connection.

avatar JEC April 15, 2011 at 4:09 pm

Budget Realities –
Entitlements – welfare, once called AFDC, curtailed in 1996 by Clinton – limited to five years in a life time – nothing is the alternative. In 1965 the goal was to protect children from the affects of poverty. Aid to Families with Dependent Children. It stopped being the discussion under Clintion. If you choose nothing, plan for more police and more prisons (FYI – the US is now the most imprisioned population on the planet).

Medicare – you’re right dump it – it just helps keep for profit health care profitable. And now’s a good time, just as baby boomers are getting old. I guess the younger generation is telling their parents where to get off.

FEMA Flood Insurance – now here’s one I bet didn’t even make it on your radar screen. After Social Security FEMA flood insurance represents the second largest liability for the US Government. If there ever was a program best suited for the private sector it’s selling flood insurance. (But wait, the Private sector refused to sell insurance in coastal areas, that’s why FEMA stepped in – under Reagan – so much for the market forces.)

Military and taxing the rich – in WWII the top tax rate was 90% – yes, 90% – because those with the most to lose had the most to protect. The working class paid with their lives; the rich paid with dollars. Now the working class pays for everything – the rich pay for nothing. The US military is burdened by being overfeed. So little was expected for our money we ended up with $600 toilet seats and didn’t question it. They lost their edge. But we are in wars – wars started by this generation for our reasons. If you have any character you will take responsibility for your actions and pay for these wars now and not shift the burden to the next generation. Governments fight wars with taxes – period!!! No taxes, no wars.

Economic inequality – what kind of society do you want to live in? What are your values? Do you support heonistic glutony while your neighbor dies of starvation? How hard of a heart do you have? What value should rule your society? No democracy has ever survived the economic inequality we currently have. The fact is the ruling oligarchy has all the power, both parties and the media – what’s the saying about absolute power corrupting. Soceity is a delicate flower that requires care. Consider that in 2008 40% of personal 401k accounts shifted from the workers to the banks – but we got to watch Barry Bonds put on Trial. There will be justice when the bankers are jailed and tried as the thieves they are. But amazing, their are people out there, people who read the OBRag who actually advocate submissions to the rulers. I guess some of us don’t believe in democracy.

If you cannot find a civil path to solutions remember this – the US is the best armed population in the world. Given how much we seem to loathe one another, Mexico could look like a love fest compared to what could happen here.

avatar RB April 15, 2011 at 4:51 pm

Do you ever check what you write?
“Now the working class pays for everything – the rich pay for nothing.”JEC
The richest 50% of the taxpayers paid 96.7% of all income taxes.

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