Yesterday, the Obama administration unveiled its proposal to avert the looming fiscal showdown. The plan included $1.6 trillion in increased taxes on the rich over the next decade, $400 billion in savings to be found in Medicare and other social programs, $50 billion in stimulus spending to begin next year, and an end to current debt ceiling rules.
This proposal is not new. It reflects the very policies Obama not only put forth in 2011, as Kevin Drum noted, but also campaigned on extensively this year. They are the very policies that the American public voted for in November when they granted Obama another four years. Exit polling also showed that 60 percent of voters wanted to see income taxes increased for wealthy Americans.
However, these facts didn’t stop conservatives from acting as though Obama had proposed the “Kill All The Puppies Act of 2012″. Here are five overreactions to Obama’s plan:
Worse than surrender in the Civil War: Leading conservative commentator Charles Krauthammer likened Obama’s proposal to the terms of surrender offered to Confederates in the Civil War, only the president’s deal was worse. “It’s not just a bad deal, this is really an insulting deal… Robert E. Lee was offered easier terms at Appomattox and he lost the Civil War,” said Krauthammer.
Out of a fairytale: Writing in her Wall Street Journal column, Kimberley Strassel lambasted the plan as “something out of Wonderland and Oz combined.” She went on to argue that Obama wasn’t negotiating in good faith. “The most frightening aspect of the White House proposal is that it wasn’t an error.”
The supposed endgame behind the whole “starve the beast” plan was to end up creating a crisis that would force the elimination of Social Security and Medicare.
Those two programs have long been a major thorn in the side of ideological conservatives because they refute basic conservative dogma by…
1. Being government programs designed to help the entire population.
2. Actually working.
3. Being tremendously popular.
These facts damage one of the primary tenets of conservatism, that government doesn’t work, period. Why do you think they have also tried so hard for a plan “B” by their repeated plans and attempts to privatize both programs? Luckily for us those plans have always failed, at least so far.
By purposefully being fiscally irresponsible by lowering taxes while increasing government spending over 30 years the GOP has sent both the debt and the deficit skyrocketing. Their problem is that now that they finally have the “crisis” they have been trying to engineer, they lack enough public support to follow through. The overwhelming majority of the population wants to keep SS and Medicare going, even exits polls in this election confirmed that.
Those same polls and others have also shown that most people understand that a combination of both spending cuts and increased revenues via higher taxes is necessary. Not only to try to shore up the viability of the social programs but to avoid more damage to our credit rating and ultimately a possible economic crash and default on our debt.
The funny part of all this is that by agreeing to sequestration the GOP has now painted itself into a corner where taxes will go up no matter what happens. I don’t see how they can spin this into a win politically even with their PR machine cranked up to 11. As I said elsewhere here, Obama simply outplayed them in the “long game.” The Dems planned for this at the last debt ceiling negotiations while the Republicans failed to think it all the way through.
Personally I am going to stock up on a lot of popcorn because we are about to see four weeks worth of crying, whining, and hand wringing by the GOP. Regardless of what happens during those weeks the deficit will eventually end up being reduced and the Republicans are not likely to get much of the credit for doing so. Who knows, maybe instead of simply using it as a slogan the Republicans will finally see the need to actually become a fiscally responsible party in the end?
/Not holding my breath
Wonkbook’s Number of the Day: 6.2%, or $3,446. According to the Tax Policy Center, that’s the blow to after-tax income is 3.7 percent, or $412, most of which comes from the expiration of the stimulus tax breaks. Families right in the middle lose 4.4 percent of their after-tax income, or about $1,984, mostly from the expiration of the stimulus tax breaks and the payroll tax cut. And for families in the top one percent, going over the fiscal cliff will mean losing 10.5 percent of their after-tax income, or $120,537, mostly due to the expiration of the Bush tax cuts. So everyone takes a hit, but the rich get hit the hardest.
Step back for a moment to consider what this means: After a decade in which median household income fell by more than $10,000 — making it perhaps the worst decade for the middle class in modern American history — Congress, by virtue of being unable to come to a deal, might actually cut the money middle-income Americans have to spend after taxes by another $1,984.
They are, to their credit, trying to come up with a way to keep that from happening. We’ve got much more on those negotiations, and on the fiscal cliff in general, in today’s top story, so keep reading!
Congress is planning a post-election dodge of the fiscal cliff. “Senate leaders are closing in on a path for dealing with the ‘fiscal cliff’ facing the country in January, opting to try to use a postelection session of Congress to reach agreement on a comprehensive deficit reduction deal rather than a short-term solution. Senate Democrats and Republicans remain far apart on the details, and House Republicans continue to resist any discussion of tax increases. But lawmakers and aides say that a bipartisan group of senators is coalescing around an ambitious three-step process to avert a series of automatic tax increases and deep spending cuts…[S]enators would come to an agreement on a deficit reduction target — likely to be around $4 trillion over 10 years — to be reached through revenue raised by an overhaul of the tax code, savings from changes to social programs like Medicare and Social Security, and cuts to federal programs. Once the framework is approved, lawmakers would vote on expedited instructions to relevant Congressional committees to draft the details over six months to a year.” Jonathan Weisman in The New York Times.
If you retire in 2022 or after, Ryan and Romney want to hand you a voucher instead of Medicare coverage. Studies show most seniors then paying 1,000—6,000 more every year of their retirement after that.
What would U.S. Rep. Paul Ryan’s budget mean for Michigan families? Using nonpartisan data, the bottom line is stark. If the Ryan budget passes, a tiny proportion of Michiganders would benefit, but millions would lose.
The biggest winners in Michigan would be households making more than $1 million a year. An analysis by the Urban-Brookings Tax Policy Center finds millionaires would pay an average of $265,000 less in taxes.
To make room for new tax cuts for the very rich, the Ryan budget eliminates middle-class tax breaks and cuts social programs. With the tax cut the plan gives to a single Michigan millionaire, communities could pay the salaries of five firefighters earning the state’s median household income of $48,000 a year.
Michigan senior citizens would pay more for less security. Medicare guarantees health care for about 1.5 million Michigan senior citizens. But the Ryan budget would end Medicare as we know it.
The plan would require Michigan seniors retiring 10 years from now to use a voucher to help pay for private insurance or accept less Medicare aid. The value of the vouchers would decline over time, falling behind rising health insurance prices. The Congressional Budget Office estimates that senior citizens, or their families, would have to find an additional $6,000 each year to buy the same coverage seniors have now.
The following makes an excellent case for the morality of much-maligned social programs, and how - contrary to typical Tea Party rhetoric - those social programs honor the values of America’s founding fathers. There’s far too much good stuff for me to quote in one page, so please read the whole thing - I’ve pasted the first few paragraphs below:
This evening, as I was trying to distract myself from the mundaneness of folding laundry and prepping dinner, I ran into some Facebook drama. I don’t think any of us intends to get into trouble on Facebook, it just happens. Tonight, in the sea of emotions—errr—comments, I felt like I had to represent the facts and of course the topic had to be public aid.
My first thought was, in a country that is supposed to stand for freedom, opportunity, and security for all, why would a human being want to see another human being starve? Why? I am very familiar with the SNAP program (food stamps). It runs at 98 percent efficiency. That means there is nearly no waste, no fraud, and almost total accountability. It is one of the most efficient government programs there is. And that level of efficiency tells us all one thing: The people using the program all need the program because they all qualify for the program. Think about that for a moment.
One of the most noticeable things about the comments I encountered in that Facebook exchange was that people felt that anyone using a form of public aid was using their money. I found it interesting, from a sociological perspective, how possessive these people were of tax dollars that go into the general coffers when used towards social programs such as SNAP, Social Security, Medicare, etc. When referring to those programs I started reading things like: “I don’t want MY MONEY…” even though all money goes into one giant funnel. Personally, I don’t like working to support what I think are illegal wars that cost an estimated six trillion dollars. I would much rather pay taxes for healthcare and college or trade school for every one of my fellow citizens, but somehow public sentiment has changed to the point where that has a negative connotation, which flies in the face of the very foundation our Founding Fathers established for this country.
“All the property that is necessary to a Man, for the Conservation of the Individual and the Propagation of the Species, is his natural Right, which none can justly deprive him of: But all Property superfluous to such purposes is the Property of the Publick, who, by their Laws, have created it, and who may therefore by other laws dispose of it, whenever the Welfare of the Publick shall demand such Disposition. He that does not like civil Society on these Terms, let him retire and live among Savages. He can have no right to the benefits of Society, who will not pay his Club towards the Support of it.”
~ Benjamin Franklin, Founding Father, American diplomat, statesman, and scientist; letter to Robert Morris, December 25, 1783
They run hospitals, schools, and social programs. They are stalwart leaders in many spiritual communities. And they are contributing vital insights to the Christian theological discussion. If nuns went on strike, many of the institutions of the Catholic Church would grind to a standstill.
Sure, a work stoppage of this sort is a long shot. But I’d love to see it. Having witnessed both priests and nuns in action, there’s no doubt in my mind which group dominates in the getting-shit-done department. It would be a fine show watching the bishops try to scramble and pick up the slack if the sisters said “enough.”
Certainly, the nuns would have good reason to do so. A storm has been brewing since April, when the Vatican released a statement condemning American nuns for showing too much independence of thought and not adequately deferring to the bishops, who, Rome tells us, “are the church’s authentic teachers of faith and morals.” A remarkable June 1 story in the New York Times recounted how the Vatican criticized the sisters for “focusing its work too much on poverty and economic injustice, while keeping ‘silent’ on abortion and same-sex marriage.
When French President Nicolas Sarkozy was ousted by his socialist opponent Francois Hollande on May 6, the verdict from opinion leaders was swift and certain: France’s election results represented a sure repudiation of Europe’s strategy of government budget cutting to restore the economy.
But a closer look at how austerity has actually played out in Europe tells a much different story—and offers a lesson for American policymakers.
The austerity agenda, critics have it, in which debt-laden governments have slashed services and social programs, has angered European voters. Worse yet, the critics claim, it’s not working, as European nations that have followed this supposedly vicious austerity program are struggling with nonexistent growth and slipping back into recession.
And their solution is entirely predictable: austerity critics call for additional debt-fueled stimulus spending, despite the fact that trillions have already been spent to kick-start the European economy, to little effect.
However, it turns out that those blasting Europe’s experience with spending restraint omit some critical facts. Contrary to what you may have heard, spending cuts have largely been lacking in Europe’s economic crisis response. Instead, in most European nations, austerity has mostly taken the form of higher taxes. We shouldn’t be surprised Europe is struggling: when you raise taxes in a weak economy, it has a negative effect on investment and economic growth.
Americans are sick and tired of Washington’s dysfunctional politics. But it’s not Congress they should be angry at
omething is rotten in these United States, and Americans know it. As usual, the focal point of their anger is Washington’s dysfunctional politics and partisan bickering. But the problem isn’t just the decline of civility in the halls of the Capitol. It’s much bigger. Today the country is reaping the foul harvest of policy decisions it has enthusiastically endorsed over the last 30 years..
How mad are Americans? Just look at this chart. For the last 30 years, Gallup has polled Americans about whether they are satisfied with the direction in which their country is heading. This chart shows the gap between the percentage that is satisfied and the percentage that is not. When the chart heads north of the zero line, most people are satisfied. When it heads south, most aren’t. And it’s fallen off a cliff.
In fact, the numbers have been sliding southward for a decade. There have been some brief upticks — the post-9/11 launch of the war on terror, the 2003 Iraq invasion, Barack Obama’s 2009 inauguration — but the trend is clear. And there’s no simple, short-term explanation. Earlier periods of intense dissatisfaction, such as the early 1980s and early 1990s, were closely tied to sharp economic downturns. But the recent decline was already in full swing when Americans seemed to be living large, well before the 2008 Great Recession.
Why? Because over the past few decades, Americans eagerly supported a series of decisions aimed at rolling back government’s influence in daily life. They were popular at the time. But now the country is paying a heavy price.
Call it a hangover from America’s neoliberal binge of the late 20th century, a massive political project aimed at limiting government’s role in everyday life. Americans wanted “a minimum of government authority,” Ronald Reagan said while campaigning for the presidential nomination in 1976. “Very simply, they want to be left alone.” And that was exactly the program enacted over the next quarter-century: Marginal tax rates were reduced, especially for the wealthy; social programs were restricted; controls on commerce and finance were removed. By the time 2000 rolled around, Reagan was remembered as one of the greatest presidents in modern history.
By then, the project of restricting government and liberating market forces was a bipartisan one. It was a Democrat, President Bill Clinton, who famously conceded in 1996 that the era of big government was over. Clinton signed the North American Free Trade Agreement in 1993 and a trade agreement with China in 2000, saying that this was “the only way we can recover the fortunes of the middle class in this country.” He also signed laws that loosened federal control over the financial sector, promising they would actually “enhance the stability of our financial services system.” Despite all his personal baggage, the American people heartily approved of this agenda: Clinton ended his presidency with a 65 percent approval rating.
Clinton merely followed what was, by then, the conventional wisdom about the virtue of the neoliberal project. Federal Reserve Chairman Alan Greenspan helped set the tone, promising that free markets would generate wealth and regulate themselves effectively. The United States, Greenspan said in 2005, had a “far more flexible, efficient, and hence resilient financial system than the one that existed just a quarter-century ago.” Yes, Greenspan’s credibility took a beating after 2008, but before the crisis, he was one of the country’s most highly regarded policymakers. A 1998 Gallup poll showed that 57 percent of Americans had a favorable view of the Fed chairman, while only 9 percent had an unfavorable view. “With Greenspan, we find comfort,” journalist Bob Woodward wrote in his 2000 book Maestro. “He helps breathe life into the vision of America as strong, the best, invincible.”
Moving to protect the Pentagon, Republicans controlling the House are pressing cuts to food stamps, health care and pensions for federal workers as an alternative to an automatic 10 percent cut to the military come January.
The automatic spending cuts, totaling $98 billion next year in a new estimate, are punishment for the failure of last year’s deficit-reduction “supercommittee” to strike a deal. Lawmakers in both parties want to avoid the automatic cuts, but Democrats are strongly opposed to the GOP approach, which slices more than $300 billion from domestic programs over the coming decade while preventing the Pentagon from absorbing a $55 billion blow to its budget next year.
The butter for guns swap faces a veto threat from the White House and rejection by the Democratic Senate, which say the GOP measure unfairly hits the middle-class and the poor. Democrats are making it plain they expect any effort to turn off the automatic spending cuts to include additional taxes. The resulting deadlock is highly unlikely to be resolved before Election Day.
The measure contains cuts supplied by six different House committees and includes changes to the food stamp program that would remove almost 2 million recipients through tighter enforcement of eligibility rules and would cut back a 2009 benefit increase, costing a family of four $57 a month. Federal workers would have to contribute 5 percentage points more of their pay toward pension plans that are more generous than most private sector workers receive.
Moving to protect the military from a crippling wave of budget cuts next year, a key House committee voted Monday to cut instead food aid, health care and social services like Meals on Wheels.
The measure would require federal employees to contribute more to their pensions, saving taxpayers more than $80 billion over the coming decade, while illegal immigrants would be denied tax refunds from the $1,000 per-child tax credit. There’s no companion legislation moving in the Democratic-controlled Senate, and the proposal doesn’t stand a chance of making it to President Barack Obama’s desk for signature.
But the vote was a symbolic swipe at Obama in an election year focused on the economy.
The cuts approved by the Republican-controlled Budget Committee total more than $300 billion over the coming decade. The panel approved them on a party-line 21-9 vote; the full House is scheduled to vote on the measure on Thursday.
The cuts are likely just a sample of what’s in store next year from Republicans if Mitt Romney wins the White House and the GOP takes back the Senate. Romney promises much tougher cuts to domestic programs and an even bigger boost in the Pentagon’s budget, while the House GOP budget promises sharp cuts to Medicaid and a dramatic overhaul of Medicare for future beneficiaries.
The emphasis is mine because this is bascially what the upcoming election is all about. Do we vote to help the dsiadvantaged or do we vote to help out major corporations?
But Democrats say Republicans are unfairly targeting the poor and vulnerable. They believe that legislation to prevent the Pentagon cuts should include tax increases that strike wealthier people.
Top Budget panel Democrat Chris Van Hollen of Maryland said the food aid cuts would mean 280,000 children would lose free school lunches and 1.8 million people — out of 46 million currently covered — would lose food stamp benefits while large agricultural businesses would continue to receive lucrative subsidies. The GOP plan would carve 4 percent from projected food stamp spending over the coming decade, including repeal of a 2009 benefits boost under Obama’s economic stimulus measure that currently awards an additional $57 a month to a family of four.
“This plan hits the food and nutrition programs but totally exempts all the agricultural subsidies,” Van Hollen said.
What a clever idea, cut off school lunch programs but make sure agricultural subsidies aren’t going anywhere.
Stepping into the debate, however, has been the U.S. Conference of Catholic Bishops, who forcefully oppose cuts to programs that help the poor and vulnerable, singling out cuts to food stamps as “unjustified and wrong” and assailing the effort to deny the child tax credit to undocumented workers as sure to thrust vulnerable children into poverty. The vast majority of children who would be affected by the tax credit proposal are U.S. citizens.
At least Paul Ryan believes in his church more than Ayn Rand, so maybe he will have a change of heart.
“But the reason I got involved in public service, by and large, if I had to credit one thinker, one person, it would be Ayn Rand.”
Oh, uh maybe not.