Tag Archives: Bush tax cuts

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The view from outside Washington


The President’s speech today began a new conversation in Washington about how to reduce the deficit while protecting crucial investments in our country’s future.

But as we seek to build an organization based outside of Washington, President Obama’s speech also provides an unusually stark contrast — one all of us can use to start conversations with our friends and neighbors about what’s at stake in this election.

He spoke about things you don’t generally hear in Washington conversations too often dominated by special interests: He’ll cut waste and excess at the Pentagon — particularly spending that is requested not by our military, but by politicians and corporate interests.

He’ll eliminate tax cuts for Americans in the highest tax brackets who don’t need them, including himself — and he will reform the individual tax code so that it’s fair and simple and so that the amount of taxes you pay isn’t determined by what kind of accountant you can afford.

Some cuts he proposed are tough. But they’re also smart and surgical — helping us balance our books while still doing the right things to win the future. President Obama’s plan would protect the middle class, invest in our kids’ education, and make sure we don’t protect the wealthiest Americans from the costs of reform at the expense of the most vulnerable.

The other side has presented a very clear alternative: End Medicare as we know it, privatizing the program that millions of seniors rely on for health care. Make deep cuts to education. Slash investments in clean energy and infrastructure. All to pay for tax cuts for people making over $250,000 a year, and all while actually raising our national debt.

In short, their plan will please a special interest donor base and those who put ideology before results rather than reduce deficits over the long term. And let’s be clear: They think they can get away with it because, fundamentally, they don’t think you’ll do anything about it.

That’s where I know we can prove them wrong. Because we can respond right now by building an organization that will stop them — not just in this deficit battle, but in the next election so they never have the chance to enact these proposals.

Here’s the first step. Join our fight for a deficit reduction plan that will actually reduce the deficit — with a goal of shared prosperity through shared responsibility. Add your name to support President Obama’s plan — and then help bring more people into the conversation:

www.barackobama.com

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Budget: Shutdown Averted


Late Friday night, just minutes from an impending government shutdown, congressional negotiators and President Barack Obama reached a deal to fund the government for the rest of the fiscal year, cutting $38.5 billion under current funding levels. House Speaker John Boehner (R-OH) and other Republicans hailed the deal as an important step to reining in the deficit, while Obama lauded it as a bipartisan achievement, comparing it to the compromise he helped broker late last year on extending the Bush tax cuts for two years. “A few months ago, I was able to sign a tax cut for American families because both parties worked through their differences and found common ground,” he said in a statement. “Now the same cooperation will make possible the biggest annual spending cut in history, and it’s my sincere hope that we can continue to come together as we face the many difficult challenges that lie ahead, from creating jobs and growing our economy to educating our children and reducing our deficit.” To keep the government running, lawmakers passed a short-term spending measure and are preparing to vote on a final agreement later this week.

CUTS DWARFED BY BUSH TAX CUTS: While the details of the deal are still emerging — the agreement would cut $13 billion from programs at the Departments of Labor, Education and Health and Human Services, $1 billion more in an across-the-board cut from domestic agencies and $8 billion in cuts to the State Department and foreign aid — the New York Times reports that negotiations came down to the wire, as Republicans sought to move the goal posts on negotiation and press for greater cuts. On Thursday night, for instance, Obama believed that he “had made a breakthrough in the negotiations, when he told Mr. Boehner that he would sign on to spending cuts of roughly $38 billion — $5 billion more than he had offered two days earlier.” But the following morning, Boehner reneged, saying that he would demand “north of the amount we’d offered the night before.” The demand led to a heated exchange between Obama and Boehner in which the President said, “I’m the president of the United States, you’re the speaker of the House. We’re the two most responsible leaders right now. We had a conversation last night, and what I’m hearing now doesn’t reflect that.” The final agreement of $38.5 billion in spending cuts, however, ia still dwarfed by the lost revenue from extending the Bush tax cuts, which the Republicans loudly championed. That policy deprives the government of roughly $150 billion in revenue over a similar period of time. As Alex Seitz-Wald points out, “So while they very nearly shut down the government to extract painful spending cuts, Republicans had already wiped out those spending cuts many times over with the revenue lost from extending the Bush tax cuts.”

RIDERS REMAIN: Despite securing a significant concession on spending, House Republicans were forced to drop over 40 riders or policy demands — including Rep. Mike Pence’s (R-IN) amendment to defund Planned Parenthood and another provision that would have blocked standards to protect public health from carbon dioxide, mercury, and other toxic pollutants — from the short-term budget bill. Instead, they secured a guarantee that the issue would receive an up or down vote on the Senate floor and kept provision that would prohibit the District of Columbia from using its own funds to pay for abortion services. The rider would not save any additional federal dollars, however, since it only prohibits the District from spending its own locally-raised tax dollars on the procedure, reviving a 13-year ban President Obama overturned in 2009. Washington D.C.’s Congressional delegate, Eleanor Holmes Norton (D), condemned the provision and warned that Republicans may still advance an unresolved measure that would ban on the city from running needle exchange programs and would actually increase spending (a study from Yale University found that needle exchange can reduce government spending by millions of dollars by preventing disease transmission.) “The District is still on the auction block during the final negotiations over the budget bill because Republicans want a ban on the use of D.C. local funds for needle-exchange programs in the package, which would guarantee the spread of HIV/AIDS among our citizens,” Norton said. Another rider secured by Republicans would also reinstate a school voucher program in D.C. and make small changes in the Affordable Care Act.

THE NEXT FIGHT: Over the weekend, Republicans reiterated that the short-term funding negotiations were only a dress rehearsal for the looming fight over an increase in the debt ceiling. Boehner insisted on Saturday that there is “not a chance” Republicans will deliver a “clean bill” to raise the debt ceiling and House Majority Leader Eric Cantor (R-VA) predicted that “the White House and the president will actually capitulate” and agree to “spending caps, entitlement reforms, budget process reforms ” in the debt limit increase. It is widely understood, however, that failing to raise the debt ceiling on schedule could have immediate and dire consequences for government services and the global economy. As the Center for American Progress’ David Min has pointed out, it would force an immediate cut of approximately 40 percent to all activities of the federal government — a severe blow to our already struggling economy. It could also erode confidence in U.S. Treasury bonds, causing interest rates to spike and the possible destabilization of global financial markets. If investor confidence is eroded and Treasury rates go up, the higher costs of debt maintenance would counteract (and potentially could even be larger than) any spending cuts at issue. Sen. Lindsey Graham (R-SC) has acknowledged as much, as has Boehner, Rep. Paul Ryan (R-WI), and conservative columnist George Will . This has not prevented many GOP lawmakers from threatening to vote down an increase in the debt limit if their partisan demands are not met. Senate Minority Leader Mitch McConnell (R-KY) has said there can be no increase without entitlement cuts and Sen. Rand Paul (R-KY) demanded an implicit 44 percent cut in all government programs in exchange for an increase.

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Economy: A Sensible Budget Alternative


Yesterday, the Senate nixed two budget-cutting proposals — the House GOP budget bill and the Senate Democratic alternative — and exposed “the fault lines within the Republican and Democratic parties over fiscal issues.” Three Tea Party Republicans “who want deeper cuts” joined all Democrats in a 44-56 vote against the GOP bill. But 11 Democrats joined all Republicans in a 42-58 vote the Democratic plan, with some arguing it cut too little and others arguing it cut too much. The government is currently funded until March 18, after which most federal services will cease if a new funding bill for the remaining six months isn’t passed. White House budget director Jacob Lew said the rejection of the two bills “made it abundantly clear that we are going to need to work together on a bipartisan basis.” But a look at the GOP’s idea of compromise reveals an aggressive need to balance the budget on the backs of the disadvantaged while simultaneously impairing economic recovery. At the Center for American Progress yesterday, Democratic leader Sen. Chuck Schumer (NY) advocated an “all of the above” approach that “incorporate[s] mandatory cuts and revenue raisers into the mix” rather than “continuing the fixation on domestic discretionary cuts” in order to reign in the deficit responsibly. While recognizing there are tough decisions ahead to reach budgetary goals, Americans are signaling support for a progressive proposal that can responsibly avoid stymieing economic growth and hurting middle-class families at the same time.

THE SLASH AND BURN: Intent on fulfilling their pledge, House Republicans plowed through the federal budget to reach $57 billion in spending cuts in H.R. 1, their continuing resolution to fund the government through 2011. Bypassing pragmatic cuts to outdated programs and subsidies, the House GOP took their ax to vital public investments and our nation’s most vulnerable populations. It would leave 10,000 low-income military veterans and 10,000 long-term disabled people without housing assistance, nearly one million low-income students without academic support, numerous pregnant women and mothers without food and health care assistance, 11 million patients without health care received at Community Health Centers, and at least 5 million children without access to anti-poverty services when the number of children in poverty is at a record high. While leaving the Pentagon’s record-high budget request intact, Republicans still jeopardized national safety by cutting funding to food safety regulators, local law enforcement, and air transportation safety. And despite making job creation their top priority, the House GOP turned H.R. 1 into a job-killer out to kneecap economic competitiveness by drastically reducing investment in public infrastructure, cutting nearly 50 percent of federal job training funding and potentially driving the unemployment rate “up to 9.7-10 percent.” Federal Reserve Chairman Ben Bernanke and numerous economists have stated that the GOP bill could “cost about 700,000 jobs through 2012.” H.R. 1 ended up being so detrimental to “the drivers of long-term economic growth and job creation” that President Obama promised to veto the bill if passed. “This is a highly politicized slash-and-burn budget,” Sen. Patty Murray (D-WA) said after it failed. “This debate is about more than dollars and sense. It’s about real people with real lives.”

THE RESET: The Democratic budget proposal “coalesced around a spending bill that cuts government funding by $6 billion in 2011” — a far less damaging alternative. However, as The Washington Post’s Ezra Klein indicates, the Democratic baseline still fails to “accelerate our economy” because it focuses solely on deficit reduction without offering any spending on economic investments. In a speech at the Center for American Progress yesterday, Schumer called on Congress to “reset” its approach to deficit reduction. “We need to stop falling into the trap of measuring fiscal responsibility in terms of willingness to cut government, and instead focus on what matters — reining in the deficit,” he said and proceeded to offer a more responsible way to do so. First, Schumer revived his proposal from last year to institute a surtax on millionaires and billionaires — a proposal, he noted, that was “the most popular proposal” among Americans in a recent poll. He also advocated for closing the tax gap by going after tax dodging and income sheltering by big corporations, a gap that “has gotten as high as over $300 billion a year this past decade.” Pointing to mandatory spending as “the largest contributor to the deficit,” Schumer also suggested Congress reduce unnecessary subsidies handed out to industries that don’t need them every year. In an interview with ThinkProgress‘s Pat Garofalo, Schumer said oil and gas subsidies “stick[] out like a sore thumb” because “the entire rationale for it is gone.” With the price of oil at $100 a barrel, “the subsidy, in economic terms, doesn’t mean anything other than to make some people wealthy who are already wealthy,” he said. Sen. Bernie Sanders (I-VT) agreed, advocating similar millionaire surtaxes and elimination of tax breaks for oil companies to address the deficit. Schumer pushed back hard against cuts to Social Security. “Social Security doesn’t have any problems until 20 years from now,” he said, adding that the deficit needs to be reduced long before then.

THE MAIN STREET VIEW: While House Speaker John Boehner (R-OH) might think “Americans don’t have a clue” about the problems facing our economy, the perspective from outside the beltway is pretty clear. Most Americans want to see a compromise on the federal budget to avoid a government shutdown, but 56 percent of Americans chose creating jobs over cutting spending as the more important government priority. Fifty-nine percent of Americans favored repealing the Bush tax cuts, and 49 percent thought defense spending should be a top priority for cuts, “even if it means eliminating programs that bring jobs to your state.” However, Americans “across all ages groups and ideologies said by large margins that it was ‘unacceptable’ to make significant cuts to entitlement programs in order to reduce the federal deficit.” What’s more, a sizable majority supported making wealthier Americans share more of the sacrifice — be it through reduced Social Security and Medicare payments or, the most popular option, a surtax on millionaires. Overall, Americans overwhelmingly rejected cuts to social programs. The progressive plan outlined by the Center For American Progress’s Michael Ettlinger, Michael Linden, and Reece Rushing “brings the budget into primary balance by 2015 and brings our deficits to sustainable levels” through pragmatic cuts in 2015, including “eliminating roughly $35 billion in corporate subsidies” and “targeting $60 billion in specific defense cuts for a 7 percent overall reduction.” Coupling responsible cuts at a more economically viable time while raising revenues — such as “applying a new 2 percent surtax to adjusted gross income above $1 million” — will help achieve important budget goals “while protecting middle-class families, continuing vital economic investments, and adequately funding other national priorities.” While tough choices must be made, “proposing to balance the budget only on tax increases or only on spending cuts” while the economy is still fragile “is both unrealistic and bad public policy.” Any feasible deficit reduction plan will balance both the budget and the sacrifice to avoid crippling the economy and hurting struggling middle-class families.