Unimaginable

Two years ago, who would have thought that the Huffington Post, a liberal-minded news source, would have headlined a story with this:

Here’s the opening paragraph:

WASHINGTON – President Barack Obama, less than two months after signing tax cuts for the wealthiest Americans into law, is proposing a budget to congress that attacks programs that assist the working poor, help the needy heat their homes, expand access to graduate-level education and undermine that type of community-based organizations that gave the president his start in Chicago.

And who would have thought two years ago that a Republican—Ron Paul—would appear on television and in the context of the budget call our Democratic president a “warmonger”?

All weekend I heard Jack Lew, Obama’s budget director, on the cable shows trying to explain why the President’s cuts were not only necessary, but courageous.  Well, okay.  But they certainly aren’t representative of the Democratic Party I used to know.  I’ve never heard of a Democrat arguing, for instance, that we should cut $100 billion from Pell Grant programs, have you?

Mr. Lew, who was President Clinton’s last budget director,  was on CNBC’s Squawk Box this morning, again defending the President’s budget, due to be released today.  He did make one good point:

I left this job ten years ago with a surplus of $5.6 trillion over the next ten years; I came back with deficits of $10 trillion over the next ten years. 

I suppose it’s bad manners these days to point out why Mr. Lew found things in such bad shape, or maybe it’s simply that everyone has forgiven the Bushies for their tax-cutting frenzy, since Mr. Obama seems to have partially embraced their strategy, too.

But I find it bad manners to talk about massive budget cuts—domestic discretionary spending, as Obama bragged this morning, will go back to Eisenhower levels—without talking about the enormous revenue short fall, brought on by a starve-the-government-beast philosophy. I never heard Mr. Obama mention that in his short budget speech this morning.

Such a philosophy used to be the property of the Republican Party, but it is increasingly being embraced, to some degree or another, by Democrats.

The federal government is spending about 25.3% of GDP.  But it is taxing the country at about 14.4% of GDP.  What’s wrong with that picture?  Why should all of the pressure be on the spending side, especially when Democrats—which is supposed to be a goverment-friendly party—control the White House and the Senate? 

To be fair, the budget projections in the President’s new budget do show that in ten years, revenues would be 20% of GDP, and spending will decrease to 23.1%.  But no one believes House Republicans will agree to raise revenues so responsibly.  There mission is to kill government, not fund it.

In any case, the President’s $3.73 trillion budget contains some $1.1 trillion in budget cuts over the next ten years, which according to The Wall Street Journal, amounts to about  a 14% reduction in the projected debt over that time.  About one-third of the savings would come from tax increases, including some on the wealthy, but not nearly enough to make up for the tax-cut deal Obama made with Republicans at the end of last year.

Besides the cuts noted at HuffPo, the budget does manage to offer up $78 billion in defense cuts, even as we are spending somewhere around $2 billion a week—that’s every week—in Afghanistan and another $ 1 billion a week in Iraq. 

On both issues—tax hikes for the wealthy and defense budget cuts—Obama would have the American people with him if he were to go farther.  A poll at the end of last year showed that 61% of Americans prefer tax increases for wealthy Americans as a “first step” toward tackling the deficit.  Next in line was cutting defense spending, at 20%. So, there is room to act responsibly on the revenue side, as well as the spending side.

Predictably, the Right says Obama’s budget doesn’t go far enough.  Speaker John Boehner said Obama’s budget “continues to destroy jobs by spending too much, borrows too much and taxes too much.”  He also falsely claimed, “We’re broke.”

Congressman Paul Ryan, budget guru for the fiscal-sky-is-falling Republican Party, said,

Presidents are elected to lead, not to punt. And this president has been punting.

Even  deficit hand-wringers on the Democratic side are chiming in with criticism, not of the President’s dramatic cuts, but of his failure to do more. Erskine Bowles, the Democratic co-chairman of Obama’s debt commission, said:

The budget goes nowhere near where they will have to go to resolve our fiscal nightmare.

Republican Joe Scarborough said this morning on his show that the whole thing was “depressing.”  He complained that the administration is “slashing like crazy” the relatively small discretionary part of the budget—about 15% of federal spending—while “they don’t the courage to go after the part of the budget that causes the debt crisis.”

By courage, of course, Scarborough means going first on offering cuts in Social Security, Medicare, and Medicaid.  But why would Obama want to do that?  Tea Party Republicans claim they were elected as serious budget cutters, pledging to change the game in Washington.  Why not let them offer up their “courageous” plan first?  So far, they have offered nothing on entitlements, hoping, I suppose, that Obama would take the bait and offer up something first. 

But I can still remember the last campaign in which many Republicans demagogued cuts in Medicare Advantage, which cuts were used as a partial funding instrument of the health care reform act. They tried to sell senior citizens on the idea that Democrats were jeopardizing Medicare.  So, this time, Republicans get to go first.

John Boehner did pledge that “it’s all coming,” speaking of the GOP’s long-term deficit-reduction strategy.  And when it gets here, Obama’s budget cutting, which doesn’t look all that good right now to many liberals, may suddenly look pretty good.  And the President may be able to take advantage of the division in the Republican ranks between the kill-government-at-all costs wing and those who just want to wound government so severely it will never walk again.

That is if he doesn’t cut another deal with them.

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5 Comments

  1. ansonburlingame

     /  February 14, 2011

    Duane,

    I don’t know if you read my earlier comment on a different blog before you wrote this blog. Maybe you did is my guess.

    But my response is the same and thus I repeat my earlier comment.

    Duane,

    OK, let’s do some simple math. GDP today is about $14 Trillion. The federal government collects about $2 Trillion in revenue and spends about $3.5 Trillion.

    We collect about 14% our our GDP in revenue and spend about 25% (divide the two little numbers by the one big one).

    OK, you want it to be 20/20 in terms of percentage of GDP. 20% of 14 is $2.8 Trillion both in spending and taxes each, right.

    So we cut $700 Billion out of federal spending and raise taxes by about $800 Billion PER YEAR in each category. At that point you will be happy, right?

    Now on the tax side of that argument we just had a “war” to try to raise taxes to cover less than 10% of the required tax increase to reach your stated goal of 20% of GDP collection of revenues. NO political party had the guts to do just that small amount.

    Now the Republicans are about to split their party to achived a $100 Billion decrease in spending in one year (while really needing to cut about $700 Billion) to meet your goal. The split in the Republican idea seems to be in the range of $30 Billion and $100 Billion with Democrats sitting on the sidelines in glee waiting for voters to catch on what they, the voters, might lose in that fight.

    NOW President Obama has offered up $400 Billion in TEN years as reasonable cuts to make. That is in the range of $40 Billion each year in those ten years. I wonder why he is not campaigning for the “liberal” Republicans trying their damndist to cut “only” $30 Billion this year and telling his party to get on board that train.

    And if that is bad right here in River City, think how the Egyptians will try to deal with THEIR issues with much more limited means. They will need to strike Oil akin to the reserves in Saudi Arabia to even begin to deal with such problems, socially.

    As for Europe, well……? Seems like a world wide dilemma to me. NO ONE knows how or even wants to live within their means. OK, where is the money going to come from globally to achieve that economic dictate?

    And remember the above cuts and tax increases ONLY eliminates the deficit. They do nothing to PAY DOWN the $14 Trillion debt at a level close to 100% of GDP. Now I ask, what should THAT percentage become, the debt divided by GDP figure? 100%, 75%, 50% or what? Remember 1% of GDP is $140 Billion per year in debt(not deficit) reduction alone which NO ONE is calling for today!!!

    So once again I am all “ears” to hear how you will even “bend the curve” much less tell me which curve (debt, deficit or both), where we should eventually wind up (OK, 20% in revenue and taxes) and WHEN we might get there.

    And of course my first question is the 20% figure. Where did that come from? Could it be 15% or maybe 25% depending on how much “socialism” one demands I suppose or to put it in the current terms how BIG or LIMITED government should become in the U.S.

    Remember 1% is triple digit numbers in Billions while we are arguing, locally over $0.2 Billion ($200 Million EAS funding).

    Finally, given such simple numbers but with huge consequences tell me why someone other than Alfred E. Newman should NOT be worried, about us, Europe, Egypt and lots of other places around the world. We CANNOT print or borrow the resources to achieve our social goals, we must PRODUCE them, right here in River City and in Cairo as well, along with London, Paris, Athens, etc.

    And if you or others on the left try to redistribute the wealth or production we already have today….? When we do that we will all be looking for John Galt to produce something for us while we equally eat out of the same garbage cans.

    Anson

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  2. ansonburlingame

     /  February 14, 2011

    Juan,

    Sure sounds a lot like Egypt to me. Inequity in wealth is a favorite topic for you and Duane. OK, fix it, democratically.

    Until we find a way to PRODUCE more, here and everywhere else, I remain skeptical that ANYONE can fix the economic demands to live beyond simple means for ANYONE. Just try no big screen TVs for anyone and see what happens, democratically.

    I keep “falling back” that ANY government must be limited to the very basics. From that point on only individual initiative can provide, unequally, as such intitiatives certainly are.

    “People” want more and more from government all over the world. And when government cannot meet those expectations, then look what happens, in Egypt today and ….. tomorrow who knows what next.

    Based on such concerns I might start at 5/5% as the right “size” of government and see what happens. You and Duane start at 20/20 and we might meet somewhere reasonable, but still much more limited than what we have today. I think we can both agree that 20/20 is not achievable today, politically at least no matter how hard anyone tries.

    We will be lucky to be at 24/15 come Nov 2012 with both sides claiming victory!! And I bet lots that NO ONE will try to touch the third rails in the meantime. No one will go first. Oh hell, I will. Raise retirement age to 75, means test SS and Medicare and leave Medicade to the states to sort out!!! Now have a ball with that one.

    Sorry, no links, just thinking on my own again.

    Anson

    Anson

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  3. Jane Reaction

     /  February 14, 2011

    It is too easy for service members to gain a retirement stream for which they did not contribute, unlike people who paid in their entire working life to Social Security.

    Start instead with major cuts in military spending and means-test people on Tricare.

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