Robert Reich: Beware the "Middle Ground" of the Great Budget Debate

Image via WikipediaRobert Reich: Beware the "Middle Ground" of the Great Budget Debate

How debates are framed is critical because the "center" or "middle ground" is supposedly halfway between the two extremes.

We continue to hear that the Great Budget Debate has two sides: The president and the Democrats want to cut the budget deficit mainly by increasing taxes on the rich and reducing military spending, but not by privatizing Medicare. On the other side are Paul Ryan, Republicans, and the right, who want cut the deficit by privatizing Medicare and slicing programs that benefit poorer Americans, while lowering taxes on the rich.

By this logic, the center lies just between.

Baloney.

According to the most recent Washington Post-ABC poll, 78 percent of Americans oppose cutting spending on Medicare as a way to reduce the debt, and 72 percent support raising taxes on the rich -- including 68 percent of Independents and 54 percent of Republicans.

In other words, the center of America isn't near halfway between the two sides. It's overwhelmingly on the side of the president and the Democrats.

I'd wager if Americans also knew two-thirds of Ryan's budget cuts come from programs serving lower and moderate-income Americans and over 70 percent of the savings fund tax cuts for the rich -- meaning it's really just a giant transfer from the less advantaged to the super advantaged without much deficit reduction at all -- far more would be against it.

And if people knew that the Ryan plan would channel hundreds of billions of their Medicare dollars into the pockets of private for-profit heath insurers, almost everyone would be against it.

The Republican plan shouldn't be considered one side of a great debate. It shouldn't be considered at all. Americans don't want it.

Which is why I get worried when I hear about so-called "bipartisan" groups on Capitol Hill seeking a grand compromise, such as the Senate's so-called "Gang of Six."

Senator Dick Durbin, Democrat of Illinois, a member of that Gang, says they're near agreement on a plan that will chart a "middle ground" between the House Republican budget and the plan outlined last week by the president.

Watch your wallets.

In my view, even the president doesn't go nearly far enough in the direction most Americans would approve. All he wants to do, essentially, is end the Bush tax windfalls for the wealthy -- which were designed to be ended in 2010 in any event -- and close a few loopholes.

But why shouldn't we go back to the tax rates we had thirty years ago, which required the rich to pay much higher shares of their incomes? One of the great scandals of our age is how concentrated income and wealth have become. The top 1 percent now gets twice the share of national income it took home thirty years ago.

If the super rich paid taxes at the same rates they did three decades ago, they'd contribute $350 billion more per year than they are now -- amounting to trillions more over the next decade. That's enough to ensure every young American is healthy and well-educated and that the nation's infrastructure is up to world-class standards.

Nor does the president's proposal go nearly far enough in cutting military spending, which is not only out of control but completely unrelated to our nation's defense needs -- fancy weapons systems designed for an age of conventional warfare; hundreds of billions of dollars for the Navy and Air Force, when most of the action is with the Army, Marines, and Special Forces; and billions more for programs no one can justify and few can understand.

If Americans understood how much they're paying for defense and how little they're getting, they'd demand a defense budget at least 25 percent smaller than it is today.

Finally, the president's proposed budget doesn't deal with the scandal of the nation's schools in poor and middle-class communities -- schools whose teachers are paid under $50,000 a year, whose classrooms are crammed, that can't afford textbooks or science labs, that have abandoned after-school programs and courses like history and art. Most school budgets depend manly on local property taxes that continue to drop in lower-income communities. The federal government should come to their rescue.

To think of the "center" as roughly halfway between the president's and Paul Ryan's proposals is to ignore what Americans need and want. For our political representatives to find a "middle ground" between the two would be a travesty.

Robert Reich is the author of Aftershock: The Next Economy and America's Future, now in bookstores. This post originally appeared at RobertReich.org.

Taking on G.O.P., Obama Unveils Debt Relief Plan - NYTimes.com

Taking on G.O.P., Obama Unveils Debt Relief Plan - NYTimes.com

By MARK LANDLER and MICHAEL D. SHEAR

WASHINGTON — President Obama made the case Wednesday for slowing the rapid growth of the national debt while retaining core Democratic values, proposing a mix of long-term spending cuts, tax increases and changes to social welfare programs as his opening position in a fierce partisan budget battle over the nation’s fiscal challenges.

After spending months on the sidelines as Republicans laid out their plans, Mr. Obama jumped in to present an alternative and a philosophical rebuttal to the conservative approach that will reach the House floor on Friday. Republican leaders were working Wednesday to round up votes for that measure and one to finance the government for the rest of the fiscal year.

Mr. Obama said his proposal would cut federal budget deficits by a cumulative $4 trillion over 12 years, compared with a deficit reduction of $4.4 trillion over 10 years in the Republican plan. But the president said he would use starkly different means, rejecting the fundamental changes to Medicare and Medicaid proposed by Republicans and relying in part on tax increases on affluent Americans.

The president framed his proposal as a balanced alternative to the Republican plan, setting the stage for a debate that will consume Washington in coming weeks, as the administration faces off with Congress over raising the national debt ceiling, and into next year, as the president runs for re-election.

Mr. Obama named Vice President Joseph R. Biden Jr. to lead the negotiations with Congress, which the administration hopes will produce the outlines of a deal by the end of June, though a detailed agreement might have to await the outcome of the 2012 election. Mr. Biden played a similar role in talks that averted a government shutdown at the 11th hour, over issues far less thorny than those on the table now.

In a 44-minute speech to an audience at George Washington University that included Representative Paul D. Ryan of Wisconsin, the author of the Republican plan, Mr. Obama was often combative and partisan, saying the Republican approach would hurt the elderly by driving up the cost of medical care, deprive millions of health insurance and starve the nation of investments in its future.

“These are the kind of cuts that tells us we can’t afford the America that I believe in,” he said. “I believe it paints a vision of our future that’s deeply pessimistic.”

“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,” the president continued, as Mr. Ryan sat stone faced. “There’s nothing courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.”

Yet Mr. Obama acknowledged that the rising medical costs and the mounting debt required action. And he warned Democrats that his administration would have to cut cherished programs and strictly limit the growth of Medicare and Medicaid. “If we truly believe in a progressive vision of our society,” he said, “we have the obligation to prove that we can afford our commitments.”

Mr. Obama said he would meet his $4 trillion deficit-reduction target by cutting spending across a range of government programs, from farm subsidies to federal pension insurance.

He called for cutting $400 billion more in military spending — twice what his defense secretary, Robert M. Gates, told Congress was the largest cut he could recommend.

In a sign of the tensions the plan may cause within the administration, officials at the Pentagon said Mr. Gates was not told of Mr. Obama’s proposal until Tuesday. In a statement, a Pentagon spokesman, Geoff Morrell, said that “further significant defense cuts” would reduce the military’s capability. “It is important that any reduction in funding be shaped by strategy and policy choices, and not be a budget math exercise,” Mr. Morrell said.

Republicans criticized the plan, both for the cuts in military spending and for what they said was an overall lack of detail.

“Republicans, led by Chairman Ryan, have set the bar with a jobs budget that puts us on a path to paying down the debt and preserves Medicare and Medicaid for the future,” Speaker John A. Boehner said in a statement. “This afternoon, I didn’t hear a plan to match it from the president.”

Mr. Boehner repeated a threat to refuse to raise the $14.3 trillion ceiling on the national debt, which the government is likely to breach in early July, unless the administration agrees to rein in spending and deficits. The administration has sought to keep the debt ceiling issue separate from the broader budget debate, and Mr. Obama addressed it only indirectly on Wednesday.

“If our creditors start worrying that we may be unable to pay back our debts,” Mr. Obama said, “that could drive up interest rates for everyone.”

Still, in what some analysts said was a gesture to Republicans, Mr. Obama said his plan would contain a trigger to require across-the-board spending cuts if, by 2014, the federal debt was still projected to be rising as a percentage of the total economy.

The trigger would apply not only to spending but also to what the administration calls “tax expenditures” — essentially payments to taxpayers for deductions for charitable donations or home mortgages.

The use of the phrase “tax expenditures” allows the administration to lump tax-related issues into the spending category. Mr. Obama was more direct in his call for allowing the Bush-era tax cuts for higher-income Americans to expire in 2012.

The president agreed to extend the cuts last December, as part of a budget deal with the newly elected Republican majority in the House. Now, with the economy getting back on its feet, Mr. Obama attacked the demand by Republicans to make the lower tax rates permanent as emblematic of their plan to enrich the wealthy on the backs of the elderly and poor.

“They want to give people like me a $200,000 tax cut that’s paid for by asking 30 seniors to each pay $6,000 more in health costs? That’s not right, and it’s not going to happen as long as I am president,” Mr. Obama said, his only line that drew applause.

While Mr. Obama’s plan does not detail specific cuts, analysts said it offered enough detail to set off a substantive debate with Republicans. Some said the proposal for capping the annual cost increase in Medicare and Medicaid to just above the economic growth rate was surprisingly conservative. Others said they were pleased that Mr. Obama had called for overhauling Social Security, even if he was vague and said it was not a leading culprit for the deficit.

“It looks like Ryan smoked him out, so to speak,” said Rudolph G. Penner, a senior fellow at the Urban Institute.

Mr. Penner said Mr. Obama’s plan hewed closely to the recommendations of his commission on deficit reduction. Mr. Obama did not explicitly endorse those recommendations when the commission submitted its report in December — a decision that fueled criticism from Republicans and some Democrats that he was not facing up to the tough choices in the budget debate.

The co-chairmen of that commission — Erskine B. Bowles, who was a chief of a staff to President Bill Clinton, and former Senator Alan K. Simpson — were in the audience Wednesday, along with Mr. Biden. At one point, Mr. Biden appeared to nod off, closing his eyes for 30 seconds.

Jackie Calmes, John Harwood and Thom Shanker contributed reporting.

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Obama to Call for Broad Plan to Reduce Debt - NYTimes.com

Image via WikipediaObama to Call for Broad Plan to Reduce Debt - NYTimes.com

By JACKIE CALMES

WASHINGTON — President Obama will call this week for Republicans to join him in writing a broad plan to raise revenues and reduce the growth of popular entitlement programs, as the battle over the nation’s financial troubles moves past Friday’s short-term budget deal and into a wider and more consequential debate over the nation’s long-term fiscal health.

In a speech to be delivered at a university here on Wednesday, Mr. Obama will in effect come off the sidelines on the debate over reducing the nation’s debt, which is reaching dangerous heights as the population ages.

After months of criticism that he has not led on budget talks, Mr. Obama will urge bipartisan negotiations toward a multiyear debt-reduction plan that administration officials said would depart sharply from the one proposed last week by House Republicans.

The Republican plan includes a shrinking of Medicare and Medicaid and trillions of dollars in tax cuts, while sparing defense spending. Mr. Obama, by contrast, envisions a more comprehensive plan that would include tax increases for the richest taxpayers, cuts to military spending, savings in Medicare and Medicaid, and unspecified changes to Social Security.

In his remarks, which come after Friday’s bipartisan deal to cut domestic spending by about $38 billion for the remainder of this budget year, Mr. Obama will not offer details but will set deficit-cutting goals, White House officials said. The numbers were still under discussion on Sunday.

“He’ll lay out his approach this week in terms of the scale of debt reduction he thinks the country needs so we can grow economically and win the future — a balanced approach,” David Plouffe, the senior White House political strategist, said on “Fox News Sunday,” one of four talk shows on which he appeared Sunday.

“Obviously, we need to look at all corners of government,” Mr. Plouffe said, adding, “We’re going to have a big debate.”

Until now, Mr. Obama has avoided prescribing specific changes to entitlement programs like Medicare, beyond those contained in his health care overhaul. Indeed, few of the recommendations made by his own bipartisan fiscal commission were included in the budget he presented to Congress in February.

What is more, while Mr. Obama proposed a five-year freeze on the growth of domestic spending, he recommended increases in education, research, infrastructure and clean-energy programs — emphasizing that although deficit reduction is important, so are investments to create jobs and skilled workers.

The growing debate over federal spending and taxes is certain to ripple from the White House and Congress to the 2012 presidential campaign, helping to shape voters’ assessment of Mr. Obama’s record and challenging rivals for the Republican presidential nomination to respond, even as they court conservative voters who oppose any compromise with Mr. Obama.

Whether anything tangible comes of the debate, it will contrast the parties’ visions of the role of government.

Republicans reacted skeptically to word of Mr. Obama’s speech. “I sit here and I listen to David Plouffe talk about, you know, their commitment to cut spending and knowing full well that for the last two months we’ve had to bring this president kicking and screaming to the table to cut spending,” Representative Eric Cantor of Virginia, the House majority leader, said on Fox.

The timing of Mr. Obama’s remarks reflects a White House strategy devised late last year after Republicans won their House majority, together with the confluence of four events, two last week and two ahead.

Friday night’s 11th-hour agreement on spending cuts, which averted a government shutdown, removed what had been a distraction for months over this year’s unfinished federal budget. Administration officials said they also hoped that the compromise helped build trust with the House speaker, John A. Boehner, that would carry over to the larger debates about long-term spending and the national debt.

Some lawmakers said Sunday that they opposed the compromise, but leaders in both parties remain confident it will pass in the House and Senate this week.

Also last week came a moment the administration had been awaiting for months: Representative Paul D. Ryan of Wisconsin, the House Budget Committee chairman, outlined House Republicans’ long-term budget plan.

Mr. Ryan said it would cut $6 trillion in the coming decade, though budget analysts questioned some of the claimed savings. The plan would turn Medicare into a voucher program for future generations and slash spending for the need-based Medicaid program and other domestic initiatives, while largely sparing the Pentagon and cutting $4 trillion more in corporate and high-income taxes.

The White House settled on a strategy in December by which Mr. Obama would wait for the House Republicans to lay down their cards before he proposed major reductions in popular entitlement benefit programs, according to interviews with administration officials at the time.

Mr. Obama’s budget waiting game, however, has helped to fuel widespread criticism by Republicans, pundits and some Democrats that he has failed to lead.

Another impetus to Wednesday’s move is the White House’s belief that a bipartisan “Gang of Six” senators will announce this week that they have reached agreement on a debt-reduction package similar to that of the president’s fiscal commission.

After months of private discussions, the tentative agreement among the three Republican and three Democratic senators would cut military and domestic programs and overhaul the tax code, eliminating popular tax breaks but using the new revenues to lower income-tax rates and reduce annual deficits. It would be the model, if not in all details, for Mr. Obama’s own goals, Democratic officials say.

Perhaps the biggest prod for Mr. Obama to act, however, is the need for Congress to vote to raise the legal limit on the federal debt, now $14.25 trillion. The government will hit that limit on its borrowing authority in as few as five weeks, the Treasury Department has said. Without an increase by early July, the government cannot continue to make payments on its existing debt, potentially forcing it into an economy-shaking default.

Speaking on Saturday in Connecticut, Mr. Boehner said Republicans would not agree to raise the cap “without something really, really big attached to it.”

Unlike the recent spending-cut negotiations, in which Mr. Obama was not active until the final days, “he knows he has to take a greater role from the beginning” on the debt-limit measure and any companion plan for reducing debt, said an adviser who spoke on the condition of anonymity.

Several presidential advisers interviewed in recent weeks said Mr. Obama has been torn between wanting to propose major budget changes to entice Republicans to the bargaining table, including on Social Security, and believing they would never agree to raise revenues on upper-income Americans as part of a deal.

Three House Republican leaders, including Mr. Ryan, were on the fiscal commission; unlike the three Senate Republicans, they opposed the recommendations because they raised revenues and did not cut enough from health care.

The risk to Mr. Obama includes further alienating liberals in his own party. Progressive groups have formed coalitions to oppose any changes to Social Security, for instance.

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