President Obama’s Speech on Fiscal Responsibility
We here at Winning Progressive approached President Obama’s speech on fiscal policy with some apprehension on Wednesday given the substantial pressure from Republicans and the D.C. chattering classes to cut domestic spending, destroy the social safety net, and provide yet more tax cuts to the wealthy elite. Fortunately, our apprehensiveness was largely misplaced, as the President provided a ringing endorsement for progressivism, our ability to achieve fiscal balance without undermining core government programs, and the need for the wealthy elite to start paying their fair share again. In addition, the President was clear in his rejection of the radical and pessimistic proposal from the Republicans to cut taxes for the wealthy and reduce the deficit on the backs of the middle class, working class, and poor.
Winning Progressive does have some concerns about the speech. For example, the two-to-one ratio of spending cuts to tax increases is too heavily tilted toward cuts given that taxes are at their lowest point since the 1950s. Also, the discretionary spending cuts are large and undefined. And, most worrisome is that while President Obama’s plan is a reasonable ending point, it is problematic if it is meant as an opening offer in negotiations with GOP Rep. Paul Ryan’s radical Path to Poverty proposal.
But overall, President Obama’s speech and proposal were quite positive. Now, it is up to us progressives to speak up in support of the fundamental progressive values that our President vowed to protect, and to push for policies that reflect those values by promoting economic growth, preserving Medicare and the social safety net, and asking the wealthy elite to again pay their fair share so that we can invest in America. Help do so by:
*Contacting President Obama, thanking him for his defense of progressivism, and urging him to stand strong on these issues
* Contacting your congressional representatives and urge them to support the progressive vision laid out in President Obama’s speech
* Writing a letter to your local newspaper editor echoing this message. Here are links for submitting letters to the editor for national papers, and to newspapers in Colorado, Connecticut, Delaware, Illinois, Iowa, Maine, Massachusetts, Michigan, Minnesota, Missouri, New Hampshire, Ohio, Pennsylvania, Rhode Island, Vermont, and Wisconsin.
Following are important portions of President Obama’s speech, along with some commentary:
President Obama starts the speech with a powerful description of what progressivism is all about – the concept that our nation is stronger when we work together to achieve what we cannot do on our own:
But there’s always been another thread running through our history -– a belief that we’re all connected, and that there are some things we can only do together, as a nation. We believe, in the words of our first Republican President, Abraham Lincoln, that through government, we should do together what we cannot do as well for ourselves.
And so we’ve built a strong military to keep us secure, and public schools and universities to educate our citizens. We’ve laid down railroads and highways to facilitate travel and commerce. We’ve supported the work of scientists and researchers whose discoveries have saved lives, unleashed repeated technological revolutions, and led to countless new jobs and entire new industries. Each of us has benefitted from these investments, and we’re a more prosperous country as a result.
Part of this American belief that we’re all connected also expresses itself in a conviction that each one of us deserves some basic measure of security and dignity. We recognize that no matter how responsibly we live our lives, hard times or bad luck, a crippling illness or a layoff may strike any one of us. “There but for the grace of God go I,” we say to ourselves. And so we contribute to programs like Medicare and Social Security, which guarantee us health care and a measure of basic income after a lifetime of hard work; unemployment insurance, which protects us against unexpected job loss; and Medicaid, which provides care for millions of seniors in nursing homes, poor children, those with disabilities. We’re a better country because of these commitments. I’ll go further. We would not be a great country without those commitments.
Next, the President lays out the argument in favor of asking the wealthy to pay a bit more to fund the government investments that are so critical to our national greatness:
As a country that values fairness, wealthier individuals have traditionally borne a greater share of this burden than the middle class or those less fortunate. Everybody pays, but the wealthier have borne a little more. This is not because we begrudge those who’ve done well -– we rightly celebrate their success. Instead, it’s a basic reflection of our belief that those who’ve benefited most from our way of life can afford to give back a little bit more. Moreover, this belief hasn’t hindered the success of those at the top of the income scale. They continue to do better and better with each passing year.
The President then smartly discusses how we managed to balance the budget during the 1990s without engaging in the types of blatant attacks on the social safety net that Republicans are launching now:
To meet this challenge, our leaders came together three times during the 1990s to reduce our nation’s deficit — three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice. But they largely protected the middle class; they largely protected our commitment to seniors; they protected our key investments in our future.
As a result of these bipartisan efforts, America’s finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers.
The President then rightly describes how Republican policies during George W. Bush’s presidency have led us into the fiscal mess we are in today. Unfortunately, the President predictably fails to specifically identify those misguided policies as being the result of Republican rule.
But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program -– but we didn’t pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.
The President then seeks to dispel popular misconceptions about the budget by explaining that most spending goes towards Medicare, Medicaid, Social Security, and the military:
So here’s the truth. Around two-thirds of our budget — two-thirds — is spent on Medicare, Medicaid, Social Security, and national security. Two-thirds. Programs like unemployment insurance, student loans, veterans’ benefits, and tax credits for working families take up another 20 percent. What’s left, after interest on the debt, is just 12 percent for everything else. That’s 12 percent for all of our national priorities — education, clean energy, medical research, transportation, our national parks, food safety, keeping our air and water clean — you name it — all of that accounts for 12 percent of our budget.
The President then attacks the Republicans’ draconian budget proposals, and smartly portrays them as being based on a fundamentally pessimistic view of what we can achieve as a country:
These are the kinds of cuts that tell us we can’t afford the America that I believe in and I think you believe in. I believe it paints a vision of our future that is deeply pessimistic. It’s a vision that says if our roads crumble and our bridges collapse, we can’t afford to fix them. If there are bright young Americans who have the drive and the will but not the money to go to college, we can’t afford to send them.
It says that 10 years from now, if you’re a 65-year-old who’s eligible for Medicare, you should have to pay nearly $6,400 more than you would today. It says instead of guaranteed health care, you will get a voucher. And if that voucher isn’t worth enough to buy the insurance that’s available in the open marketplace, well, tough luck -– you’re on your own. Put simply, it ends Medicare as we know it. It’s a vision that says up to 50 million Americans have to lose their health insurance in order for us to reduce the deficit.
. . . .
This vision is less about reducing the deficit than it is about changing the basic social compact in America. Ronald Reagan’s own budget director said, there’s nothing “serious” or “courageous” about this plan. 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. And I don’t think there’s anything courageous about asking for sacrifice from those who can least afford it and don’t have any clout on Capitol Hill.
President Obama then outlines his fiscal plan to cut $4 trillion from the deficit over the next twelve years. This plan rightly includes cuts to military spending and tax increases on the wealthy. It also explains how we can expand on efforts to reduce health care costs – including by having Medicare negotiate for lower drug prices – without adopting Republican plans to abolish Medicare. Unfortunately, the plan is short on specifics, especially with regards to domestic spending cuts, improperly has a two-to-one ratio of spending cuts over tax increases, and includes a “failsafe” that requires spending cuts but not tax increases if deficit reductions are not achieved by 2014.
The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about $750 billion over 12 years.
The second step in our approach is to find additional savings in our defense budget.
The third step in our approach is to further reduce health care spending in our budget. Now, here, the difference with the House Republican plan could not be clearer. Their plan essentially lowers the government’s health care bills by asking seniors and poor families to pay them instead. Our approach lowers the government’s health care bills by reducing the cost of health care itself.
We will cut spending on prescription drugs by using Medicare’s purchasing power to drive greater efficiency and speed generic brands of medicine onto the market.
The fourth step in our approach is to reduce spending in the tax code, so-called tax expenditures. In December, I agreed to extend the tax cuts for the wealthiest Americans because it was the only way I could prevent a tax hike on middle-class Americans. But we cannot afford $1 trillion worth of tax cuts for every millionaire and billionaire in our society. We can’t afford it. And I refuse to renew them again.
But just to hold Washington — and to hold me — accountable and make sure that the debt burden continues to decline, my plan includes a debt failsafe. If, by 2014, our debt is not projected to fall as a share of the economy -– if we haven’t hit our targets, if Congress has failed to act -– then my plan will require us to come together and make up the additional savings with more spending cuts and more spending reductions in the tax code.
The President ends strong with a clear explanation for why his fiscal plans call for asking the wealthy elite to pay more of their fair share, rather than further cutting their taxes as Republicans would like to do:
In the last decade, the average income of the bottom 90 percent of all working Americans actually declined. Meanwhile, the top 1 percent saw their income rise by an average of more than a quarter of a million dollars each. That’s who needs to pay less taxes? They want to give people like me a $200,000 tax cut that’s paid for by asking 33 seniors each to pay $6,000 more in health costs. That’s not right. And it’s not going to happen as long as I’m President.
. . . .
I say that at a time when the tax burden on the wealthy is at its lowest level in half a century, the most fortunate among us can afford to pay a little more. I don’t need another tax cut. Warren Buffett doesn’t need another tax cut. Not if we have to pay for it by making seniors pay more for Medicare. Or by cutting kids from Head Start. Or by taking away college scholarships that I wouldn’t be here without and that some of you would not be here without.
Finally, President Obama closes with a clear explanation of how it is a progressive goal to show that government can provide critical services while also maintaining fiscal balance:
Indeed, to those in my own party, I say that if we truly believe in a progressive vision of our society, we have an obligation to prove that we can afford our commitments. If we believe the government can make a difference in people’s lives, we have the obligation to prove that it works -– by making government smarter, and leaner and more effective.
Tags: budget, deficits, Democrats, economy, fiscal responsibility, Medicare, Path to Poverty, Path to Prosperity, President Obama, Rep. Paul Ryan, Republicans, taxes
