June 2011, Week 2


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Mon, 13 Jun 2011 21:21:33 -0400
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What Americans Want: The People's Budget The
Congressional Progressive Caucus lays out a
surprisingly popular vision of the future. By David


A national budget tells a lot more about a country and
its politics than simply where the government's money
comes from and where it goes. As President Obama
rightly stressed, it is also "about the kind of future
we want ...[and] the kind of country we believe in."

But as happens so often in the United States, the
political and media establishments distort the public
debate by accepting the right-wing's framing. In this
case that means the issue is simply deficits and
spending cuts, not national needs and adequate revenue.
In this context, Rep. Paul Ryan (R-Wis.), the architect
of the Republican budget plan, gets taken seriously
when he proposes--with echoes of Vietnam--that we destroy
Medicare in order to save it.

Consequently, the public is confused. More
significantly, the corporate media give progressive
alternatives short shrift, even though opinon polls
show the public often supports such measures.

The United States could do much better with more active
and--yes--even bigger government, partly because many of
the things our society needs, the government can do
more efficiently, fairly and effectively than private
individuals and businesses in a market.

The corporate press, acting in its own self-interest,
is loathe to report this fact.

For example, where have you read about "The People's
Budget"? It is an alternative budget offered by the
81-member Congressional Progressive Caucus that takes
steps toward a saner role for government while reducing
the deficit more and faster than either Ryan's "Plan
for Prosperty" or Obama's plan.

The People's Budget immediately rescinds Bush tax cuts
for the rich and lets the others expire (retaining some
changes especially beneficial to the middle class), but
it also taxes estates progressively, imposes the
millionaire's tax proposed by Rep. Jan Schakowsky (with
several new, higher income tax brackets for the very
rich), taxes capital gains as regular income and
imposes a financial speculation tax.

The People's Budget also enacts a healthcare public
option and mandates negotiation of prescription prices
to reduce healthcare spending. It cuts wartime and
baseline military spending and provides for bringing
troops home from the wars in Southwest Asia. The budget
strengthens Social Security by expanding the base of
taxable earnings, and it increases spending for job
creation, education, clean energy, infrastructure,
transportation and scientific research. Conventional
budget wisdom

On the other hand, the Republican plan imposes
two-thirds of its cuts on modest-income households,
according to the Center on Budget and Policy Priorities

By making Medicaid an underfunded block grant, it
guarantees taking healthcare from the needy, including
the elderly poor. Privatizing Medicare with underfunded
vouchers will double the out-of-pocket expenses for the
average future 65-year-old. Privatization not only
shifts costs to seniors but also increases their
overall medical costs, since private insurance is less
efficient than Medicare. And for good measure, the Ryan
plan repeals the Affordable Care Act and its cost

The plan also contains absurd giveaways, such as $4.2
trillion in tax cuts mostly for the very affluent over
the next decade, and even repeals some recently passed
regulations of the financial industry. Despite all the
deficit hullaballoo, Ryan's plan only slightly reduces
the deficit in the next decade (by $155 billion)
because his destructive cutting mainly funds the tax
cuts. Ryan does set long-term plans to reduce federal
spending from 23.75 percent of gross domestic product
to less than 15 percent by 2050, the lowest share since
1951. But a bipartisan proposal made in early February
to cap spending at even 20.6 percent of GDP would
"force deep cuts in Medicare, Medicaid and Social
Security," according to the CBPP.

By contrast, President Obama would make modest cuts in
military spending, end the Bush tax cuts for the rich,
and limit tax expenditures (e.g., tax credits and
deductions). He would impose tighter cost controls on
Medicare and make Medicaid more flexible while
preserving both programs. He proposes a "debt
fail-safe" trigger to enforce reduction of debt to his
target levels. But his budget would maintain
investments in education, infrastructure and research.

On the issues, the public seems much more on the
president's side--and would even support a more
progressive solution. American dreams vs. reality

Indeed, Obama is overly conservative.

Given a choice, most Americans prefer a much more
egalitarian society, according to a 2010 study by Duke
and Harvard economists.

Most rich industrial countries recognize that
government must play a large role to achieve social
solidarity, comparative economic advantage in a global
economy, and satisfy voters' preferences, but the
United States has nearly the lowest tax revenue as a
portion of GDP of all 34 countries in the Organization
for Economic Cooperation and Development. And compared
to other OECD countries, the United States is near the
bottom in terms of equality and ranks extremely low on
social spending, poverty rates, ease of escaping
poverty, life expectancy, infant mortality, voter
participation and other indicators.

When pollsters at the University of Maryland presented
voters with information and a variety of options on the
budget, on average they increased taxes (especially on
incomes over $100,000 or more), cut military spending
and increased spending on education, job training,
environmental protection and alternative energy far
more dramatically than Obama did. In another poll, the
same researchers found that only 59 percent of
Americans think a free market system is best--a sharp 15
percentage point drop from 2009.

Similarly, the Democrats, and progressives in general,
have failed to make a political issue of how the right
has successfully, and quite consciously, instituted
polices that have redistributed wealth upward. Over the
last 25 years, the top 1 percent of American households
more than doubled their share of the national income
from 12 to 25 percent.

If income growth had been distributed equally since
1979, University of Wisconsin professor Joel Rogers
calculates, households in the bottom four-fifths would
each be making $5,600 to $10,100 more per year, thus
increasing consumer demand to stimulate the economy and
an ability to pay taxes. But as incomes for the 400
richest households quadrupled over the past dozen
years, their tax rate fell by nearly half, thanks to
both rate cuts and tax loopholes.

Instead of debating the fairness of this inequality,
Washington is focused on the government's large
deficit. Conventional wisdom--recently offered by
Standard & Poor's, which has been wrong on every major
economic crisis of the past 15 years--dictates dealing
with the deficit quickly. Yet the deficit hysteria
ignores two points. First, the country urgently needs
more--and better--jobs. Second, while conventional wisdom
also mandates deep cuts in government spending to
address the deficit, increased revenues would deal with
the problem equally well.

We are burdened by the deficit today thanks to Bush tax
cuts (which favored the rich), the wars in Afghanistan
and Iraq, the financial crisis, the resulting Great
Recession (with less revenue and increased costs) and
rising healthcare costs (made worse by Bush's poor
design of the Medicare prescription drug program). The
people's choice

Yet the Democratic Party has been overly willing to
seek a compromise that accepts--but tempers--Ryan's
framework, while giving inadequate attention to how the
deficit actually grew.

As a result of their muddled message, according to an
April Democracy Corps poll, voters initially approved
the Ryan budget by 48 to 33 percent and gave
Republicans a 16-point advantage over Democrats on
having the best budget approach. But given more
complete information, support for Ryan's budget fell
sharply. In other words, the Democrats (perhaps in
thrall to corporate interests) have failed to
forcefully articulate the vision voters already

The People's Budget, on the other hand, reflects the
historical context. It is also more in tune with the
sentiments of voters than either Ryan's or Obama's
plan. Overwhelmingly, multiple polls show that voters
oppose deep cuts in or radical transformation of
Medicare (78 percent opposed in a Washington Post
poll). By large margins, voters support a surcharge
income tax on millionaires and billionaires, which is
similar to the higher rates Rep. Schakowsky proposes
(81 percent in a March NBC/Wall Street Journal poll).
And a majority favors military spending cuts as a first
step in deficit reduction (56 percent in the Post

The People's Budget is a lot more courageous, sensible
and honest than either Ryan's plan or Obama's. It is a
program that progressives and--if ardently
championed--most Americans would support as a path not
only to a responsible budget but also to a more
prosperous, equitable future.

David Moberg is a senior editor of In These Times


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