By: Bob Lucore
In the negotiations over how to stop the federal budget from going on austerity autopilot next year, President Obama’s opening offer was exactly what everyone should have expected. It follows the main outlines of previous White House budget proposals and is consistent with the platform that the President ran on in the recent election. It calls for allowing the Bush-era tax cuts for the rich to expire, extending tax cuts for the middle class, substantial cuts in “entitlement” spending and modest amounts of additional stimulus spending.
The Republican reaction has been livid. Comedian Andy Borowitz, characterized Speaker Boehner’s reaction: “Obama needs to stop acting like he won the election." Ezra Klein points out that the Republicans are upset because the President is refusing to negotiate with himself.
As Michael Grunwald says, Republicans spent last summer saying Obama had no plan, now they complain that he is putting forth his old plan. In the campaign they claimed he would cut Medicare, now they gripe that he isn’t offering cuts in Medicare.
The GOP wants cuts in Medicare, Medicaid and Social Security, but they do not want to offer any such proposal. They would prefer to maneuver the President into making proposals to cut such programs. They continue to defend the indefensible tax cuts and preferences for the richest 2%. They are also mad because the White House would like to remove their ability to hold the nation’s good faith and credit hostage again by staging future debt ceiling crises.
Here are some thoughts to keep in mind as the austerity autopilot drama continues to unfold:
• The so-called fiscal cliff is a problem because it imposes sudden deficit reductions—tax increases and spending cuts—that will take the wind out of the sails of the economy. Because spending cuts and broad tax increases are the problem, proposals that try to shift emphasis to deficit reduction are simply attempting to confuse the issues.
• Restoring the Clinton-era tax rates for the top 2% would be far less likely to hurt economic growth than broad tax increases on the middle class. Furthermore, if revenue from taxes made fewer spending cuts necessary, more economic growth would be likely.
• Democrats should not feel pressure to cave in to Republican demands. If nothing is done before January, the Bush tax cuts will expire, including the tax cuts for the top 2% (the cuts that the GOP is so interested in protecting). Cuts in the military-industrial complex will also go into effect. The Democrats can then introduce bills to restore vital programs like unemployment insurance and a broad middle class tax cut to keep the economy growing. It would be suicidal for the Republicans to oppose them at that point.
• The world does not come to an end on January 1. If the austerity crisis has not been addressed by then, there is still enough time to act, even after the new Congress is seated. The impact of the automatic austerity provisions is more gradual than the media would lead us to believe.
Voters were clear in the election that they do not want cuts in Social Security, Medicare or Medicaid and they do want the rich to pay more in taxes. Opinion polls since the election has confirmed this result strongly. If the GOP has a death wish, they should continue to pursue their policy of opposing the President and attempting to undermine the economy.
Bob Lucore, a long-time ADA board member, is the former Director of Research and Policy for the United American Nurses and has worked for the Teamsters and the Department of Economic Research at the AFL-CIO. . He taught economics for several years at Centre College and Colorado State University and is currently studying Library and Information Science at San José State University. Bob is a member of UAW Local 1981, the National Writers Union.Back