“I don’t think people fully appreciate the nature of this budget.”
—Barack Obama, on the GOP budget plan
resident Obama’s extraordinary speech—all 4,700 words of it—given on Tuesday before the annual meeting of the Associated Press, involved some important truth-telling, most notably his saying this about the Ryan-Romney budget plan:
This is supposed to be about paying down our deficit? It’s laughable…
It is a Trojan horse. Disguised as deficit reduction plans, it is really an attempt to impose a radical vision on our country. It is thinly veiled social Darwinism. It is antithetical to our entire history as a land of opportunity and upward mobility for everybody who’s willing to work for it, a place where prosperity doesn’t trickle down from the top, but grows outward from the heart of the middle class. And by gutting the very things we need to grow an economy that’s built to last — education and training, research and development, our infrastructure — it is a prescription for decline.
Laughable. Trojan Horse. Social Darwinism. A prescription for decline. Ahhh, how sweet are the words of truth.
But there were other highlights in the speech. The President treated us to “a partial sampling of the consequences” of the Ryan-Romney budget, which, he said, “proposes massive new cuts in annual domestic spending — exactly the area where we’ve already cut the most.”
And here (in full) is how Mr. Obama characterized Republican economics generally and the bad decisions that led to the Great Recession:
…research has shown that countries with less inequality tend to have stronger and steadier economic growth over the long run.
And yet, for much of the last century, we have been having the same argument with folks who keep peddling some version of trickle-down economics. They keep telling us that if we’d convert more of our investments in education and research and health care into tax cuts — especially for the wealthy — our economy will grow stronger. They keep telling us that if we’d just strip away more regulations, and let businesses pollute more and treat workers and consumers with impunity, that somehow we’d all be better off. We’re told that when the wealthy become even wealthier, and corporations are allowed to maximize their profits by whatever means necessary, it’s good for America, and that their success will automatically translate into more jobs and prosperity for everybody else. That’s the theory.
Now, the problem for advocates of this theory is that we’ve tried their approach — on a massive scale. The results of their experiment are there for all to see. At the beginning of the last decade, the wealthiest Americans received a huge tax cut in 2001 and another huge tax cut in 2003. We were promised that these tax cuts would lead to faster job growth. They did not. The wealthy got wealthier — we would expect that. The income of the top 1 percent has grown by more than 275 percent over the last few decades, to an average of $1.3 million a year. But prosperity sure didn’t trickle down.
Instead, during the last decade, we had the slowest job growth in half a century. And the typical American family actually saw their incomes fall by about 6 percent, even as the economy was growing.
It was a period when insurance companies and mortgage lenders and financial institutions didn’t have to abide by strong enough regulations, or they found their ways around them. And what was the result? Profits for many of these companies soared. But so did people’s health insurance premiums. Patients were routinely denied care, often when they needed it most. Families were enticed, and sometimes just plain tricked, into buying homes they couldn’t afford. Huge, reckless bets were made with other people’s money on the line. And our entire financial system was nearly destroyed.
So we tried this theory out. And you would think that after the results of this experiment in trickle-down economics, after the results were made painfully clear, that the proponents of this theory might show some humility, might moderate their views a bit. You’d think they’d say, you know what, maybe some rules and regulations are necessary to protect the economy and prevent people from being taken advantage of by insurance companies or credit card companies or mortgage lenders. Maybe, just maybe, at a time of growing debt and widening inequality, we should hold off on giving the wealthiest Americans another round of big tax cuts. Maybe when we know that most of today’s middle-class jobs require more than a high school degree, we shouldn’t gut education, or lay off thousands of teachers, or raise interest rates on college loans, or take away people’s financial aid.
But that’s exactly the opposite of what they’ve done. Instead of moderating their views even slightly, the Republicans running Congress right now have doubled down, and proposed a budget so far to the right it makes the Contract with America look like the New Deal. (Laughter.) In fact, that renowned liberal, Newt Gingrich, first called the original version of the budget “radical” and said it would contribute to “right-wing social engineering.” This is coming from Newt Gingrich.
And yet, this isn’t a budget supported by some small rump group in the Republican Party. This is now the party’s governing platform. This is what they’re running on. One of my potential opponents, Governor Romney, has said that he hoped a similar version of this plan from last year would be introduced as a bill on day one of his presidency. He said that he’s “very supportive” of this new budget, and he even called it “marvelous” — which is a word you don’t often hear when it comes to describing a budget. (Laughter.) It’s a word you don’t often hear generally. (Laughter.)
And perhaps my favorite part of the speech, because I have a soft spot for practical political philosophy, is Mr. Obama’s explanation of his view of government. If any voter out there wants to know how Mr. Obama understands the role of government in society, here it is:
Now, keep in mind I have never been somebody who believes that government can or should try to solve every problem. Some of you know my first job in Chicago was working with a group of Catholic churches that often did more good for the people in their communities than any government program could. In those same communities, I saw that no education policy, however well-crafted, can take the place of a parent’s love and attention.
As president, I’ve eliminated dozens of programs that weren’t working and announced over 500 regulatory reforms that will save businesses and taxpayers billions and put annual domestic spending on a path to become the smallest share of the economy since Dwight Eisenhower held this office, since before I was born.
I know that the true engine of job creation in this country is the private sector, not Washington, which is why I’ve cut taxes for small business owners 17 times over the last three years.
So I believe deeply that the free market is the greatest force for economic progress in human history. My mother and the grandparents who raised me instilled the values of self-reliance and personal responsibility. They remain the cornerstone of the American idea.
But I also share the belief of our first Republican president, Abraham Lincoln, a belief that through government, we should do together what we cannot do as well for ourselves.
That belief is the reason this country has been able to build a strong military to keep us safe and public schools to educate our children. That belief is why we’ve been able to lay down railroads and highways to facilitate travel and commerce. That belief is why we’ve been able to support the work of scientists and researchers whose discoveries have saved lives and unleashed repeated technological revolutions and led to countless new jobs and entire industries.
That belief is also why we’ve sought to ensure that every citizen can count on some basic measure of security. We do this because we recognize that no matter how responsibly we live our lives, any one of us at any moment might face hard times, might face bad luck, might face a crippling illness or a layoff. And so we contribute to programs like Medicare and Social Security, which guarantee health care and a source of income after a lifetime of hard work. We provide unemployment insurance, which protects us against unexpected job loss and facilitates the labor mobility that makes our economy so dynamic. We provide for Medicaid, which makes sure that millions of seniors in nursing homes and children with disabilities are getting the care that they need…
What leaders in both parties have traditionally understood is that these investments aren’t part of some scheme to redistribute wealth from one group to another; they are expressions of the fact that we are one nation. These investments benefit us all. They contribute to genuine, durable economic growth…
It doesn’t make us weaker when we guarantee basic security for the elderly or the sick or those who are actively looking for work. What makes us weaker is when fewer and fewer people can afford to buy the goods and services our businesses sell, or when entrepreneurs don’t have the financial security to take a chance and start a new business. What drags down our entire economy is when there’s an ever-widening chasm between the ultra-rich and everybody else.
Finally, Mr. Obama mentioned the tax breaks for the wealthy in the Ryan-Romney budget that, he says, amount to “at least $150,000 for every millionaire in this country — $150,000.” I haven’t had time to verify the accuracy of the following claims by the President (this was actually the context for his “laughable” characterization), but here they are:
Let’s just step back for a second and look at what $150,000 pays for:
A year’s worth of prescription drug coverage for a senior citizen.
Plus a new school computer lab.
Plus a year of medical care for a returning veteran.
Plus a medical research grant for a chronic disease.
Plus a year’s salary for a firefighter or police officer.
Plus a tax credit to make a year of college more affordable.
Plus a year’s worth of financial aid.
One hundred fifty thousand dollars could pay for all of these things combined — investments in education and research that are essential to economic growth that benefits all of us. For $150,000, that would be going to each millionaire and billionaire in this country. This budget says we’d be better off as a country if that’s how we spend it.
If in November Democrats can’t defeat Republicans—almost all of whom have enthusiastically embraced “this budget”— by educating the public about the GOP’s “laughable” “prescription for decline,” then the country, with a Mitt Romney at the helm, will most certainly not be better off.
Unless, of course, you are one of the lucky few who will get that $150,000—three times the per capita yearly income in the United States—windfall.