Ever since the Republicans came into power in the House of Representatives in November of 2010 they’ve engaged in a lot of blustery posturing over social issues instead of addressing the thing that concerns most Americans; jobs. Instead of addressing core concerns, they’ve wasted a lot of time in the House trying to pass things they know will not pass the Senate much less the President’s desk. Perhaps this is a strategy designed to fire up the base and let them know they are fighting the good fight. Perhaps it’s a distraction because there is no Republican strategy to address the job situation. In fact, many of the recently proposed budget cuts are destined to cost jobs. Some estimate 700,000 jobs.
But there is one message that the Republican Party has latched on to and that’s the debt, deficit, and balancing the budget. They cite that we are in a budget crisis that requires drastic measures and austerity measures. This has unfolded at the state level in Wisconsin and other states with Republican Governors as well. If you recall, I have pointed out that there is a segment of politics that needs crises and the politics of fear in order to pass extreme legislation that would normally be laughable under normal circumstances. What better way to extract a political budgetary, government limiting advantage than from a financial crisis?
Now I don’t mean to demean the message of fiscal responsibility. But I do call into question the foregone conclusion that Republicans hold a lock on that title. We are yet again at a point where we must raise the debt ceiling. We cannot continue to do that indefinitely without serious consequences. There are economists who actually estimate the exact year when China’s economy will eclipse ours as the dominant economy. It’s in 2016. And we happen to owe China several trillion dollars of debt. We are in a big hole due to a decade of reduced tax revenue, an artificial housing bubble, and a couple of unfunded wars. The deficit is a serious matter that we should address.
The Republican solution? Cut spending, cut spending, cut spending. They held the US Government hostage recently with a threat of a shutdown unless they got a number of ridiculous spending cuts to social programs. They are making noises again on the looming vote to raise the debt ceiling despite overwhelming warnings of wrecking not only the US economy but destabilizing the world economy as well. These aren’t flippant warnings from people who have political gains in mind. This could severely damage the world trust in American credit to a point from which we could possibly never recover.
Most recently, the Republican Party has put forth a plan by Rep. Paul Ryan (R-WS). The crux of his plan calls for continued tax cuts for the wealthy and guts Medicare. As filistro noted yesterday and I noted on Sunday, this is having a negative impact on the Republican party with their own constituency. Reporter Chris Hayes noted that if Democrats really wanted to make hay over this, Senator Harry Reid should let the Ryan budget come to a vote in the Senate as is. The bill won’t pass anyway so “let Senate Republicans walk the same plank as their House counterparts”, said Hayes on Rachel Maddow last night.
Now, I can’t let President Obama off the hook here either. The White House put forth a counter plan to the Republican ‘Path to Prosperity’. It appears to be just as bad as the Ryan plan if not worse. It just increases our deficit at a slightly higher rate without gutting some of the social programs. Matt Miller, a columnist for the Washington Post and Senior Fellow at the Center for American Progress, says the Ryan plan runs up a six trillion dollar tab over next 10 years, while the Obama plan runs up seven trillion. Neither plan gets the job done adequately.
Poll after poll show that the things in these plans are extremely unpopular. But there is another plan: The Congressional Progressive Caucus made up of around eighty members of Congress and headed up by Representative Keith Ellison and Representative Raul Grijalva (It should make some conservative heads explode that America’s sanest budget fix is courtesy of an African American Muslim and a Hispanic American). The plan does many things that are popular with the American people. Economist Paul Krugman explains:
The CPC plan essentially balances the budget through higher taxes and defense cuts (about 1.8 trillion), plus some tougher bargaining by Medicare (and a public option to reduce the costs of the Affordable Care Act). The proposed tax hikes would fall mainly on higher incomes, although not just on the top 2%: super-brackets for very high incomes, elimination of deductions, taxation of capital income as ordinary income, and — the part that would be most controversial — raising the cap on payroll taxes.
The CPC proposal:
• Eliminates the deficits and creates a surplus by 2021
• Puts America back to work with a “Make it in America” jobs program
• Protects the social safety net
• Ends the wars in Afghanistan and Iraq
• Is FAIR (Fixing America’s Inequality Responsibly)
What the proposal accomplishes:
• Primary budget balance by 2014.
• Budget surplus by 2021.
• Reduces public debt as a share of GDP to 64.1% by 2021, down 16.5 percentage points
• Reduces deficits by $5.6 trillion over 2012-21, relative to this adjusted baseline.
• Outlays equal to 22.2% of GDP and revenue equal 22.3% of GDP by 2021.
Unlike the Ryan and Obama budget plans, poll after poll show that these are things the populace would like to see implemented; particularly that the wealthy and corporations pay their fair share. Economist Jeffrey Sachs sums it up thusly:
The Republicans often say that they want Congress to respect the voice of the people. The voice of the people is crystal clear. In one opinion survey after the next, the public says that the rich and the corporations should pay more taxes. The public says that we should tamp down runaway health care costs through a public option, one that would introduce competition to drive down bloated private health insurance costs. The public says that we should get out of Iraq and Afghanistan and reduce Pentagon spending.
It would be fairly simple to implement. In fact the easiest thing for the President to do would be…nothing. Let the Bush tax cuts expire to the levels in the Clinton era. This would raise revenue considerably although it would increase taxes on the middle class as well as the upper class. Some argue that the middle class needs the relief in a recession to increase discretionary spending in the economy thereby driving demand.
Other solutions are to cut Government subsides; in particular to oil companies who already enjoy record profits. But there is a danger of backlash here. The media surmises that the President’s approval ratings drop as gas prices rise. I’m not certain I completely buy that because why would that be his fault? But the perception exists and the oil companies might capitalize on that cut in subsides by punishing the public with excessively high gas prices as speculators are already doing in an attempt to turn political tides in their favour.
Obviously there are a lot of complicated issues to be addressed in the budget. Social security and Medicare have inherent flaws in them that need to be addressed, but shut them down in favour of a privatized voucher system? Best of luck with that. The tax code is in need of reform in order to give companies a competitive tax rate while closing loopholes that allow corporations to avoid paying taxes altogether. And PPACA still needs to be tweaked. Don’t give up on the public option yet.
Republicans believed they received a mandate in November of 2010 but I think they misinterpreted that mandate. They won because the economy had not recovered and the public was tired of the games in Washington DC. But instead of governing in the interests of their constituencies, they mistakenly believed it was a ratification of their policies in general and ignored what the people really wanted and needed.
I think the more people look at the Congressional Progressive Caucus budget, the more they will continue to want it. Can Congress find a bi-partisan way to get behind it?
- ‘Serious’ media starting to warm to The People’s Budget (dailykos.com)
- The Red Budget Of Courage (firedoglake.com)
- The Progressive Budget Alternative (krugman.blogs.nytimes.com)
- The People’s Budget (Huffington Post)