Obama's Deficits: Progressive Priorities, Conservative
Context

By Robert Borosage
April 14, 2011
http://www.ourfuture.org/blog-entry/2011041514/obamas-deficits-progressive-priorities-conservative-context

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 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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