Why the Coming Debate Over Spending Cuts Has Nothing to Do With Reviving the Economy | Robert Reich

[nashville_brook]

Why the Coming Debate Over Spending Cuts Has Nothing to Do With Reviving the Economy
President Obama has chosen to fight fire with gasoline.

SUNDAY, FEBRUARY 13, 2011


Republicans want America to believe the economy is still lousy because government is too big, and the way to revive the economy is to cut federal spending. Today (Sunday) Republican Speaker John Boehner even refused to rule out a government shut-down if Republicans don’t get the spending cuts they want.

Tomorrow (Monday) Obama pours gas on the Republican flame by proposing a 2012 federal budget that cuts the federal deficit by $1.1 trillion over 10 years. About $400 billion of this will come from a five-year freeze on non-security discretionary spending – including all sorts of programs for poor and working-class Americans, such as heating assistance to low-income people. Most of the rest from additional spending cuts.

That means the Great Debate that starts this week will be set by Republicans: Does Obama cut enough spending? How much more will he have cut in order to appease Republicans? If they don’t get the spending cuts they want, will Tea-Party Republicans demand a shut-down?

Framed this way, the debate invites deficit hawks on both sides of the aisle to criticize Democrats and Republicans alike for failing to take on Social Security and Medicare entitlements. Expect Erskine Bowles and Alan Simpson, co-chairs of Obama’s deficit commission, to say the President needs to do more. Expect Alice Rivlin and Paul Ryan, respectively former Clinton hawk and current Republican budget hawk, to tout their plan for chopping Medicare.

It’s the wrong debate about the wrong thing at the wrong time.

(snip)

But don’t believe for a moment that federal spending cuts anytime soon will get the economy growing soon. They’ll have the opposite effect because they’ll reduce total demand.

But we can’t get to this point – or even to have a debate about it – if Obama allows Republicans to frame the debate as how much federal spending can be cut and how to shrink the deficit. He has to reframe the debate and remind America this is not 1995. This is 2011, and we’re still in a jobs crisis brought on by the bursting of a giant debt bubble and the implosion of total demand.

MUST READ rest at link --> http://robertreich.org/post/3277360050

[DirkGently]

1. "IF Obama allows Republicans to frame the debate?" Reich's too kind. But yeah.

[leftstreet]

2. :puke: "non-security discretionary spending"

:puke:

Give me a fucking break

:grr:

[nashville_brook]

3. military spending MUST be on the table if the deficit it to be addressed

[leftstreet]

5. Every single citizen should join the military tomorrow

Food, shelter, healthcare, employment...

Where's your Budget God now, DOD?

[nashville_brook]

10. here's the UK budget by category -- amazing comparison!

they spend the lion's share of their wealth on health, education and pensions.

[sasha031]

13. and they do not call them entitlements

[DirkGently]

21. Wot? Spending more on public works & healthcare than staples like .. war? Poppycock & balderdash!

[nashville_brook]

23. codswallop!

[glinda]

25. Brilliant!

[nashville_brook]

26. i actually pulled back from "horsefeathers"

:evilgrin:

[glinda]

28. lol

[dkofos]

22. Those evil socalists

purposefully misspelled for effect

[Hannah Bell]

30. and they're also cutting.

[nashville_brook]

4. alternatively...why not address the revenue stream from corporations...

i had no idea it was so small!

[RB TexLa]

6. Only way to really cut the deficit is to tackle Defense, Medicare and Social Security

[leftstreet]

15. We could solve this by making senior citizens join the military

:eyes:

How about we start by quadrupling corporate taxes?

Then there's those barely taxed rich people....

[nashville_brook]

17. wow -- two birds! reminds me of an old Bill Hicks bit...

Grannies as stuntmen.

Grannies as infantry is the next logical step!

[nashville_brook]

20. Social Security is actually quite solvent.

[Poboy]

7. recommend.

[Better Believe It]

8. K & R

[sasha031]

9. I don't understand why Obama is choosing to go in the wrong direction

surely he has to know history...does he ever read Reich or Krugman? Or is he himself inside a bubble called the Beltway.

[PSPS]

11. To Obama, it isn't "the wrong direction" at all. He believes in reaganomics.

[sasha031]

16. sad but true

:-(

[ProSense]

12. Republicans don't care. They're trying to gut the 2011 budget. Also,

defense spending is going to be part of the debate. Any cuts Republicans demand, should first be realized in defense cuts.

Reich's proposal is interesting.

<...>

The most direct way to get more money into their pockets is to expand the Earned Income Tax Credit (a wage subsidy) all the way up through people earning $50,000, and reduce their income taxes to zero. Taxes on incomes between $50,000 and $90,000 should be cut to 10 percent; between $90,000 and $150,000 to 20 percent; between $150,000 and $250,000 to 30 percent.

And exempt the first $20,000 of income from payroll taxes.

Make up the revenues by increasing taxes on incomes between $250,000 to $500,000 to 40 percent; between $500,000 and $5 million, to 50 percent; between $5 million and $15 million, to 60 percent; and anything over $15 million, to 70 percent.

And raise the ceiling on the portion of income subject to payroll taxes to $500,000.

<...>

[PSPS]

14. Um, sorry, Rob. Social Security is not an "entitlement."

Framed this way, the debate invites deficit hawks on both sides of the aisle to criticize Democrats and Republicans alike for failing to take on Social Security and Medicare entitlements.

Social Security is a fully funded insurance program, not an entitlement. It contributes nothing to the national debt and, in fact, is not even part of the federal general budget.

Sadly, though, it soon will be thanks to Obama's crazy and malevolent "tax holiday" scheme.

[DirkGently]

18. It is an entitlement. The term is misused often though.

"Entitlements are automatic government payments to, or on behalf of, individuals or organizations that fall into some category defined by law,"

http://www.pbs.org/fmc/book/11government3.htm

SS is not charity, which is how the Republicans abuse the term "entitlement." More of the same framing problem. People get "entitlements" because they actually are "entitled" to them.

But Rob used the term correctly.

[ProSense]

19. This is why it makes no sense to demonize a word. n/t

[defendandprotect]

24. k/r

[StarburstClock]

27. All government "debate" is rigged so corruption can continue

The world knows it and is sick of it, it's only a matter of time before the U.S. has it's Egyptian-like awakening.

[Waiting For Everyman]

29. This is just like when the Word Bank etc. calls for austerity. The talk is just distraction.

Somebody gave the boys at the top the word, "do this".

Naturally they don't want to admit that, so we have the cover story fiction of pretending to argue over differences. I call bullshit on the whole fiasco.

I only want to know one thing: who did the telling. Who really is directing this show.